2016 is proving to be a big year for China's outbound M&As. More and more Chinese companies are choosing to acquire businesses abroad to advance technologies and increase their global presence. But the companies are facing increasing scrutiny from overseas regulators. China's Commerce Ministry has responded to the scrutiny and Michelle Van den Bergh was at the press conference to give us the details.
China's outbound cross-border M&A totalled more than 100 billion US dollars in the first quarter of this year, nearly surpassing the full-year record of 110 billion dollars in 2015. One of the biggest challenges that Chinese companies face is increasing scrutiny from overseas regulators.
Four US senators have raised concerns that ChemChina's acquisition of seed and pesticide giant Syngenta AG could threaten domestic food security. The Ministry of Commerce responded to those worries.
"Based on our calculations, in 2015, overseas companies that Chinese companies have invested in paid more than 19 billion US dollars in taxes to the overseas countries. They have employed more than 830,000 local workers, contributing to the local economies. ChemChina's acquisition of Syngenta is the most common business activity and Syngenta has announced that it poses no food safety or significant national security issues. The Ministry of Commerce is paying close attention to this case. We hope that foreign governments will hold a fair, transparent and non-discriminate attitude towards Chinese companies' investments. We would like to increase communications to improve mutual understanding to create a better environment for future cooperation," said Shen Danyang, Spokesman of Chinese Ministry of Commerce.
Analysts say that those regulatory risks are the biggest challenges for Chinese companies because they are unforeseeable and not limited to American firms.
But Peterson adds that many more companies now see overseas M&A as their top priority. They are more aware of the risks involved and are becoming experienced in dealing with the challenges.
