New Rules For M&A In China?

The marketplace for M&A deals in China is changing, with many western companies fearing a less hospitable reception as a result of new tax rules and regulations. PricewaterhouseCoopers, an international management consultancy, has a new paper in its 10 Minutes series arguing that the change is far broader than that as China’s priorities shift from acquiring capital to accelerating structural reforms, a change that “calls for a fundamental shift in deal-making strategy” on the part of foreign companies.

Its key points:

• Inbound and outbound M&A in China is booming, as Chinese industries consolidate domestically and expand globally.
• Foreign investors are entering or expanding in China for the China market instead of just manufacturing in China for export markets.
• As a result, they are reassessing what Chinese partners bring to the table and cautiously exploring alternatives to wholly foreign-owned enterprises.
• Private equity has emerged as an important provider of growth capital.
• Some investors recognize that new regulations affecting M&A may be creating short-term concern, but the long-term trend is toward greater clarity in a maturing system.

Those highlights read a bit penny plain, and the underlying piece adds some color, but do they fit with your experience?

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