Current Situation of Stealth Acquisition in China

Abstract

After China was accepted as a formal member to the WTO and issued its new Anti-Monopoly Law after some thirteen years drafts, there is a tendency which is becoming more and more significant during the past several years. Foreign investors in China have given up a way to simply set up their own factories within the territory as they did in the past thirty years since China reformed and opened its market, instead, nowadays through the cross-border mergers and acquisitions to acquire Chinese enterprises to enter the Chinese market as the main way becomes preferred by most of them. This new tendency cause foreign mergers and acquisitions to take more subtle and diverse ways such as joint ownership as well as seizing indirect ownership of domestic enterprises by financial tools, which is becoming an uprising new issue and task of Anti Monopoly regulation in China. On the other hand, after the MOFCOM issued its new guideline against stealth acquisition, it becomes a common concern for foreign investor and their lawyers as well. This article tend to address the reasons and under what circumstances that Chinese policy maker take into their considerations in regard of this issue.