Mergers and Acquisitions in China

Mergers and acquisitions have grown significantly in China in recent years. This fast growth in mergers and acquisitions in China can be attributed to economic reforms and China's accession to WTO.

Government agencies in China play a strong supervisory role in approving mergers and acquisitions.

Mergers and acquisitions have played a significant role in the rapid growth of China's economy in recent years. Potential of acquisitions in China is large given the rapid expansion in business in the country. While mergers and acquisitions were almost unheard in China even in the mid 1990s, they have played an important role in foreign investment in China in recent years.

Reasons for growth of mergers and acquisitions in China

Two factors played an important role in the fast growth of mergers and acquisitions in China -

• Economic reforms in China - reforms in China led to robust growth which led to increased mergers and acquisitions
• China's accession to World Trade Organization (WTO) - China's accession to WTO, opened up the doors of foreign investment to various industry sectors. This also had considerable impact on the growth of mergers and acquisitions in China.

However an important role is played by the Chinese government in regulating the merger and acquisition activities in China. Both commercial and social aspects are taken into consideration by the Chinese government in the review and approval of mergers and acquisitions.

Government agencies supervising mergers and acquisitions in China

The government agencies that play an important role in regulating mergers and acquisitions in China are -

• The Ministry of Commerce - The Ministry of Commerce regulates foreign investment in China and has the authority to supervise and approve mergers and acquisitions.
• The State Development and Reform Commission (SDRC)- This agency supervises the restructuring of public sector firms and also approves foreign investment. Thus foreign firms investing in mergers or acquisitions needs to get approval from the State Development and Reform Commission
• The State-Owned Assets Supervision and Administration Commission (SASAC) - The SASAC supervises mergers and acquisitions of enterprises owned by the state.
• The China Securities Regulatory Commission (CSRC) - The CSRC monitors the capital markets of China and plays an important role in merger and acquisition transactions.

Apart from these four, other government agencies may play a role in mergers or acquisitions depending on the specific case.

While stringent Chinese laws have characterized the process of mergers and acquisitions in China, efforts are being made in recent years to induce greater flexibility to facilitate the process of mergers and acquisitions in China.