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Chinese outbound investors may have a harder year

CHINESE companies need to get more prepared when they seek overseas expansion through mergers and acquisitions (M&A) this year due to rising global protectionism and the government's tightening regulations, according to the Global Antitrust Report by British law firm Freshfields Bruckhaus Deringer released today.

Chinese companies will face greater scrutiny in outbound deals because foreign governments have a growing focus on strategic and sensitive sectors, according to the report.

“These include stricter rules for outbound investment and increasing protectionism tendency globally,” said Alastair Mordaunt, partner of Freshfields Bruckhaus Deringer.

Chinese investments in German technology companies have led to calls for tighter controls in Germany and across the European Union over foreign investments in key sectors, while Chinese state-owned enterprises have also faced greater scrutiny from the EU, the report mentioned.

Technology, energy, mining, chemicals, real estate sectors were top targeted sectors for Chinese investments in 2016.

Meanwhile, Vice Commerce Minister Wang Shouwen said earlier this month that China is going to have greater scrutiny on outbound investment and cross-border money transactions, which may require Chinese investors to be better prepared.

In 2016, value of outbound M&A deals involving Chinese companies reached a record high of US$220 billion, almost double the amount of 2015, according to data from Thomson Reuters.

Among the figure, Europe ranked as the first targeted region for Chinese acquirers in 2016 with a value of US$99.9 billion, triple the amount in 2015 of US$33.2 billion, according to data released by a financial firm Dealogic. Followed by North America was the second popular region.


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