The “Regulations Concerning M&A of Domestic Enterprises by Foreign Investors†(referred to as the "Regulations") formally implemented on September 8th has brought a lot of shock to the manufacturing industry that has long been used as a "cluster area" for foreign capital in China. The attention of the industry and experts. Taking into account the administrative and legal intervention in foreign mergers and acquisitions of the domestic manufacturing industry is an international practice common to all countries. The industry has given more positive comments on the implementation of the "Regulations." At this point, the words of Wang Yansong, a direct participant in Xugong Machinery's M&A case and Deputy General Manager of XCMG Group, are extremely representative: “The Regulations†were formally implemented, providing a more favorable institutional guarantee for foreign M&A activities and will guide the The regulation of offshore capital participation in China’s M&A activity has a positive impact, making M&A activities of foreign capital more conducive to China’s economic development and more in line with our national interests.â€
For a long time, China's use of foreign capital has been mainly concentrated in the manufacturing sector, accounting for about 60%-70% of the total use of foreign capital, and has continued to grow in recent years. In recent years, multinational corporations have begun to aggressively enter China's large-scale manufacturing industry. At present, 9 of the world's 10 largest construction machinery companies have entered China in an all-round manner. M&A deals have focused on the backbone enterprises in China's construction machinery industry and electrical appliances industry. Leading enterprises.
However, before the Xugong merger and acquisition case that caused widespread concern, in the domestic equipment manufacturing industry, a series of “drinking and quenching thirstâ€-style mergers and acquisitions have high fever and hard to retreat: foreign investment and acquisition of Dalian Electrical Machinery Factory, foreign merger and acquisition of Northwest Bearing Factory, Jiamusi United Foreign mergers and acquisitions at harvester factories, Wuxi Weifu foreign mergers and acquisitions, Jinxi Chemicals foreign mergers and acquisitions, Hangzhou Gear Factory foreign capital mergers and acquisitions... In these foreign capital acquisitions, China’s cruel reality of brand, market, and industrial platforms has repeatedly been repeated.
In response to this problem, some experts pointed out that in recent years there has been a serious misguided trend in China's reform and opening up. Local governments have used foreign investment as the main way to promote economic development and promote restructuring of state-owned enterprises. With the encouragement of local governments, multinational corporations took the opportunity to step up mergers and acquisitions of industry leaders in various localities in China. With the advantages of "Top 500" and public relations capabilities, they acquired the high-quality assets, unique brands, core technologies, and manufacturing capabilities of China's backbone enterprises at a low price, incorporated them into joint ventures, tried to control the right to operate the business, and eventually forced China to withdraw. The purpose of eliminating potential competitors, monopolizing the Chinese market, and suppressing technological progress in China.
Gao Liang, director and researcher of the State-owned Assets Research Center of the National Development and Reform Commission of the National Development and Reform Commission, warned in December 2005, “Awareness of China's Equipment Manufacturing Backbone Enterprises Being Absorbed by Foreign Capital,â€: “If you allow the backbone enterprises cultivated by the country for many years to be annexed by transnational corporations, The core and key parts of China’s industry are controlled by foreign capital, and the country will lose its dominant power over industrial development and technological progress. The foundation of China’s economic independence will be completely eroded. The Central Government’s policy of enhancing independent innovation and revitalizing the equipment manufacturing industry will lose its premise. ."
Vice Secretary-General of China Federation of Machinery Industry Yan Yongbin said that foreign mergers and acquisitions on China's equipment manufacturing industry, "reinforcement" is still only a partial situation, but let it develop the trend is terrible. Therefore, it should be clear-cut and reasonable to set limits because it is international practice to implement administrative and legal interventions for the acquisition of domestic manufacturing by foreign capital.
Wang Yansong, deputy general manager of XCMG Group, said: “I studied the “Regulations†one by one. Compared with the previous “Interim Regulations on the Acquisition of Domestic Enterprises by Foreign Investorsâ€, the capacity and number of “Regulations†exceeded the “provisional regulations†by a factor of two. This will enable China's foreign investment mergers and acquisitions policy to be further refined, which will have a positive impact on guiding and regulating the participation of overseas capital in China's M&A activities."
For instance, Wang Yansong said that in the past, companies must sign strict confidentiality agreements for M&A activities. This determines that it is difficult for enterprises to effectively respond to and clarify relevant doubts in a manner that fully discloses information to the society. It is against this point that the new regulations have clarified the ways and means of raising questions on foreign mergers and acquisitions, and if the new regulations are introduced three months early, Xugong mergers and acquisitions will not be distorted by a large amount of false information.
Professor Shi Shiping, director of the Department of Finance at Shenzhen University, believes that opening the capital market to the outside world is an inevitable trend. In Europe, America and other places, there is a very sound foreign merger and acquisition review mechanism. We should also establish a mechanism that “doesn't work at all, but if it reaches the trigger condition, it will run automaticallyâ€, and build a standardized external environment for companies to participate in cross-border mergers and acquisitions. In this sense, the "Regulations" will not only have a negative impact on the normal mergers and acquisitions between Chinese and foreign companies, but also provide guarantees for safeguarding national economic security.
For a long time, China's use of foreign capital has been mainly concentrated in the manufacturing sector, accounting for about 60%-70% of the total use of foreign capital, and has continued to grow in recent years. In recent years, multinational corporations have begun to aggressively enter China's large-scale manufacturing industry. At present, 9 of the world's 10 largest construction machinery companies have entered China in an all-round manner. M&A deals have focused on the backbone enterprises in China's construction machinery industry and electrical appliances industry. Leading enterprises.
However, before the Xugong merger and acquisition case that caused widespread concern, in the domestic equipment manufacturing industry, a series of “drinking and quenching thirstâ€-style mergers and acquisitions have high fever and hard to retreat: foreign investment and acquisition of Dalian Electrical Machinery Factory, foreign merger and acquisition of Northwest Bearing Factory, Jiamusi United Foreign mergers and acquisitions at harvester factories, Wuxi Weifu foreign mergers and acquisitions, Jinxi Chemicals foreign mergers and acquisitions, Hangzhou Gear Factory foreign capital mergers and acquisitions... In these foreign capital acquisitions, China’s cruel reality of brand, market, and industrial platforms has repeatedly been repeated.
In response to this problem, some experts pointed out that in recent years there has been a serious misguided trend in China's reform and opening up. Local governments have used foreign investment as the main way to promote economic development and promote restructuring of state-owned enterprises. With the encouragement of local governments, multinational corporations took the opportunity to step up mergers and acquisitions of industry leaders in various localities in China. With the advantages of "Top 500" and public relations capabilities, they acquired the high-quality assets, unique brands, core technologies, and manufacturing capabilities of China's backbone enterprises at a low price, incorporated them into joint ventures, tried to control the right to operate the business, and eventually forced China to withdraw. The purpose of eliminating potential competitors, monopolizing the Chinese market, and suppressing technological progress in China.
Gao Liang, director and researcher of the State-owned Assets Research Center of the National Development and Reform Commission of the National Development and Reform Commission, warned in December 2005, “Awareness of China's Equipment Manufacturing Backbone Enterprises Being Absorbed by Foreign Capital,â€: “If you allow the backbone enterprises cultivated by the country for many years to be annexed by transnational corporations, The core and key parts of China’s industry are controlled by foreign capital, and the country will lose its dominant power over industrial development and technological progress. The foundation of China’s economic independence will be completely eroded. The Central Government’s policy of enhancing independent innovation and revitalizing the equipment manufacturing industry will lose its premise. ."
Vice Secretary-General of China Federation of Machinery Industry Yan Yongbin said that foreign mergers and acquisitions on China's equipment manufacturing industry, "reinforcement" is still only a partial situation, but let it develop the trend is terrible. Therefore, it should be clear-cut and reasonable to set limits because it is international practice to implement administrative and legal interventions for the acquisition of domestic manufacturing by foreign capital.
Wang Yansong, deputy general manager of XCMG Group, said: “I studied the “Regulations†one by one. Compared with the previous “Interim Regulations on the Acquisition of Domestic Enterprises by Foreign Investorsâ€, the capacity and number of “Regulations†exceeded the “provisional regulations†by a factor of two. This will enable China's foreign investment mergers and acquisitions policy to be further refined, which will have a positive impact on guiding and regulating the participation of overseas capital in China's M&A activities."
For instance, Wang Yansong said that in the past, companies must sign strict confidentiality agreements for M&A activities. This determines that it is difficult for enterprises to effectively respond to and clarify relevant doubts in a manner that fully discloses information to the society. It is against this point that the new regulations have clarified the ways and means of raising questions on foreign mergers and acquisitions, and if the new regulations are introduced three months early, Xugong mergers and acquisitions will not be distorted by a large amount of false information.
Professor Shi Shiping, director of the Department of Finance at Shenzhen University, believes that opening the capital market to the outside world is an inevitable trend. In Europe, America and other places, there is a very sound foreign merger and acquisition review mechanism. We should also establish a mechanism that “doesn't work at all, but if it reaches the trigger condition, it will run automaticallyâ€, and build a standardized external environment for companies to participate in cross-border mergers and acquisitions. In this sense, the "Regulations" will not only have a negative impact on the normal mergers and acquisitions between Chinese and foreign companies, but also provide guarantees for safeguarding national economic security.