China's robust economic growth has fueled a number of mergers and acquisitions that, however, are facing new challenges and opportunities during the ongoing economic downturn, a legal expert in said Monday.
Zhang Xiaomeng, a foreign legal specialist in Baker & McKenzie's Chicago office, made the remarks during an exclusive interview with Xinhua.
Zhang now counsels U.S. companies on mergers, acquisitions, joint ventures and other business transactions in China, as well as assisting
Chinese companies with investment and acquisitions overseas.
One major challenge for U.S. companies' M&As in China, Zhang said, is the understanding of new regulations in the context of China's investment
policies and overall development goals.
In that regard, Zhang suggested that U.S. companies be sensitive to delicate issues with respect to law, culture, and public relations, and
properly allocate management resources to attend to the companies' strategic issues on China.
China's legal environment has become more transparent and the regulatory framework is relatively complete, which has provided a better
environment for foreign investment, Zhang said.
"While investment in manufacturing continues to grow, a significant number of foreign investors have invested in areas such as service, high-tech, new resources, and consumer related industries," she said.
"Because M&A transactions offer immediate market access, they have become an increasingly attractive alternative to green field investments," she said.
When it comes to Chinese companies' M&As overseas, Zhang said that the distressed acquisition market and the stable regulatory environment in the United States have provided opportunities for Chinese companies' overseas
investments.
However, she considered a lack of experience in international deals as a major challenge.
"A Chinese company may find itself negotiating its first overseas acquisition with its U.S. counterpart who has handled a dozen similar
transactions overseas," Zhang noted.
Her advice to Chinese companies in that case was that they should start building up overseas experience by forming international business teams
within the company and seeking assistance from professionals to help understand the regulatory requirements and legal issues in other countries
as well as how to overcome cultural barriers.