Sharpening Strategies

3. Which industries have attracted the most foreign investment and experienced the most deal activity in the past year?

We do not have data on this. According to online sources, during 2016, foreign investment capital has generally shifted from labor-intensive to high capital and technology-driven industries.

4. Which sectors have recently opened up to increased foreign shareholding or ownership?

The government has been making efforts to further liberalize restrictions on foreign investment in the service, manufacturing, and mining industries. These relaxations have been based on successful piloting in the free trade zones. Specifically, the 2017 version of the Foreign Investment Industrial Guidance Catalogue has finally removed restrictions in highway passenger transportation, credit investigation and rating, accounting and auditing, wholesaling of agricultural products, railway transportation equipment, automobile electronics, batteries for new energy automobiles, and fuel ethanol. Restrictions on pure electric automobiles have also been loosened.

5. What are some due diligence tips specific to China M&A?

Clients are advised to pay more attention to whether: (1) certain permits or licenses will be made invalid due to the M&A deal, pre-transaction renewals of permits or licenses will be time consuming, or, in practice, the validity of the permits or licenses can no longer be kept; (2) the deal would trigger a national security review due to the specific location, industry, and product of the target or by becoming the controlling shareholder of the target; and (3) the counterparties of the target seek to revise or cease their contracts due to the change in shareholding.

6. What are the risks relating to national security reviews, by both Chinese and foreign regulators? What is your advice for parties navigating these investigations?

The standards for triggering a national security review are constantly evolving for regulators in China and all over the world. Certain industries that have traditionally attracted less attention are now under the spotlight. Parties are advised to be prepared for these changes before they act. In addition, the potential impact of a national security review on a deal should not be underestimated, and potential liabilities for deal breakups due to the national security review should be carefully considered.

7. What was the most significant transaction of the year?

ChemChina's completion of its acquisition of Syngenta in June this year attracted the most attention.

8. What are the latest investment trends in China outbound M&A? Will outbound regulatory approval measures be further relaxed or tightened?

There has been much speculation regarding the tightening of outbound M&A as well as the control of foreign exchange outflow since late 2016. However, the Belt and Road Initiative and the internationalization of the renminbi remain key policies of the Chinese government. The amount of outbound investment in the first half of 2017 experienced a sharp decrease compared with 2016—but was almost equal to the same period in 2015. Investments along the Belt and Road, on the other hand, witnessed a mild increase. According to public statements made by government agencies, investments such as those relevant to production capacity cooperation and greenfield projects by key industry players are still encouraged, while pure financial investments are not—especially by those who lack the industry experience. In general, so-called “shifting away from capital markets to the real economy”.

9. Foreign sellers are sometimes wary of the certainty of funds of Chinese buyers. Can you describe the current financing and FX landscape relevant to M&A?

This concern is evident in practice. For instance, foreign sellers are increasingly reluctant to have PRC regulatory approval as a neutral condition precedent for deal closure. Instead, they are demanding higher reverse breakup fees. But despite the tightened capital outflow controls and lengthy approval procedures, these concerns are somewhat exaggerated. While a number of projects have indeed fallen through due to failure to file with the National Development and Reform Commission (NDRC) and MOFCOM, there were many projects that were successful, particularly those in the categories mentioned in question 7.

10. How do you see M&A trends and investment strategies evolving over the next 12 months?

The PRC government has never been more cautious regarding whether a proposed investment has real relevant industry background and can be commercially justified. Projects that fail to meet these standards will be questioned and scrutinized on the basis of suspicions related to money laundering or illegitimate movement of assets. While several 'extreme' measures currently being adopted may be adjusted to more reasonable levels in the short run, curbs aimed at preventing money laundering or illegal asset transfers will likely remain.

Zheng Gao, Partner

Jingtian & Gongcheng

Zheng Gao obtained his LLB from China University of Political Science and Law in 2007 and his LLM degree from Northwestern University School of Law in 2011. He began his career in 2007 at JunHe.

Mr. Gao is experienced in onshore and offshore capital markets, and advises on a broad range of transactions, including private equity, IPOs, M&A, debt financing and outbound direct investment.

He has helped more than 20 PRC companies list on onshore and offshore stock exchanges, some of which include Forgame, Wuzhou, Chinalco, Lilanz and X-Step. In addition, he has acted for several renowned private equity funds (both RMB and USD) on closing deals with more than 50 companies (the majority of which are high tech companies). Mr. Gao is also very active in M&A and has closed several debt financing deals on behalf of morethan 20 listed companies.

Jian Yao, Partner

Jingtian & Gongcheng

Jian Yao obtained his LL.B. and B.A. in economics from Peking University and his LL.M. and J.D. from the Washington & Lee University School of Law.

Mr. Yao has practiced for over eight years and has been with Jingtian & Gongcheng since 2013. He previously worked at Zhong Lun Law Firm for four years.

He specializes in outbound investment, M&A, resources and infrastructure investments, funds and PE, and FDI.

Mr. Yao has represented large state-owned and private enterprises on their outbound projects in Africa, Southeast Asia, the Middle East, Australia, and North America. His clients include New Hope Group and CGGC Group Kingho Group.

Mr. Yao was admitted to the PRC bar in 2008 and the New York state bar in 2007. His working languages are Chinese and English.

Zhengzheng Hu, Partner

Jingtian & Gongcheng

Hu graduated from Nanjing University Law School with an LLB in 2002 and obtained his LLM with distinction from University of Leicester Law School in 2004. Mr. Hu joined Jingtian & Gongcheng in 2005 and became a partner in 2011.

Mr. Hu specializes in capital markets, private equity, M&A and FDI. He has acted as PRC legal counsel on a number of IPOs on HKEX, NYSE, NASDAQ and other stock exchanges, and has also served foreign private equity funds and other investors in various private equity and M&A transactions involving onshore equity. These projects have involved diverse industries such as real estate, mining, new energy, telecommunications, media and advertising, sports, retail, chemical and pharmaceutical, and other traditional manufacturing sectors.

Mr. Hu obtained the PRC lawyer's qualification certificate in 2006. He is a native mandarin speaker and is fluent in English.

1. 过去十二个月，有什么主要监管法规影响外商在中国的并购活动的？

根据商务部2017年7月30日发布的《关于修改<外商投资企业设立及变更备案管理暂行办法>的决定》的规定，由于并购、吸收合并等方式，非外商投资企业转变为外商投资企业，行业属于备案范围的，不用办理审批手续。这将显著提高对内并购交易流程的效率。

2. 请您说明一下中国的合并管理程序。最新的执行情况如何呢？

根据2017年上半年以来商务部公布的反垄断审查案例看，未来反垄断审查领域会有如下趋势：(1) 监管部门会增加对交易金额巨大案例的审查力度; (2) 监管部门会对涉及敏感行业领域并购案例的增加关注度，根据披露的重大案例来看，如涉及精尖工业产品、高科技产品、农业产品等均入选商务部总结当中；(3) 对未依法申报的查处或越来越趋严，对于附条件通过的案例是否正确履行将投入更多的监管力量；(4) 在现有基础上会进一步提高反垄断审查的效率，缩短审查时间，更多的简易案件有机会迅速办结。

3. 过去一年，哪种行业吸引最多外商投资和有最多并购活动？

我们不掌握有关这方面的具体信息，但根据网络公开的信息而言，在2016年，外资正在越来越多的从劳动密集型产业向资本及技术密集型产业倾斜。

4. 哪些行业最近放开外资股比限制？

中国正在进一步放宽服务业、制造业、采矿业外资准入的限制。在进一步总结自贸试验区先行先试经验的基础上，在全国范围内复制推广自贸试验区对外开放措施。具体而言，2017版本《外商投资产业指导目录》取消了对外商投资公路旅客运输、资信调查与评级服务、会计审计、农产品批发市场，轨道交通设备、汽车电子、新能源汽车电池、燃料乙醇等领域的准入限制。进一步放宽了纯电动汽车等领域准入限制。

5. 您对进行中国并购尽职调查有什么专门的建议？

结合相关项目经验，在尽职调查中，下列事项建议特别留意：(1) 特殊资质证照是否会因为并购交易而面临失效，需要较长时间完成更新前置审批或者在实践中无法继续维持；(2) 是否会因为特殊的选址、特殊的行业、生产特殊的产品及获取更多的控制权而导致触发国家安全审查；（3）某些企业的合同相对方是否会因为企业股权成分的变化要求修订乃至终止既有业务合同。

6. 中国监管机构和外国监管机构的国家安全审查带来了什么风险？对于面对这些调查，您有什么建议？

无论对于中国的监管机构还是外国监管机构而言，有关的标准并不是一成不变的。许多过去在观念里并不在国家安全审查范围内的领域如今正在全球各地引起监管部门的注意。这就意味着，企业在真正采取并购行动前需多对这些可能的变化做好预知和准备。同时，我们也建议不要低估国家安全审查对交易的影响程度，尤其是对于因国家安全审查导致的交易失败可能导致的责任进行提前处理。

7. 今年最重要的并购交易是哪一宗？

最瞩目的是中国化工今年六月完成对先正达的收购。

8. 中国境外并购投资有哪些最新的趋势？境外并购审批会进一步放宽还是收紧呢？

自2016年末以来，对收紧境外并购和控制外汇流出有诸多猜测，但“一带一路”战略和人民币国际化仍为中国政府的主要政策。2017年上半年境外投资金额与2016年同比大幅下跌，但几乎等同于2015年同期水平。另一方面，“一带一路”沿线投资小幅增长。根据政府部门的公告，仍然鼓励行业主要投资者参与生产能力合作及新建项目，但不鼓励纯粹的金融投资，尤其是缺乏行业经验的投资，即通常所谓的“避虚向实”。

9. 对于中国买家资金的可靠性，外国卖方有时会觉得担心。您可以讲述一下现时有关并购的融资和外汇管理情况吗？

这问题在实践中常见。例如，外国卖方越来越不愿意将中国监管批准作为交易交割的一项中性先决条件。相反，他们要求更高的反向分手费。但尽管存在更严格的资本流出管控和冗长的批准程序，这些忧虑似乎有些夸张。一些项目的确因为没有向国家发改委和商务部申报而未能通过审查，但仍有许多项目成功通过，尤其是问题7提到的几个类别的项目。

10. 未来12个月的并购趋势和投资策略将有什么变化？

中国政府对拟议投资是否具有相关行业背景、是否具有商业合理性采取了更谨慎的态度。如果项目未能符合这些标准，就会牵涉有关洗钱或非法资产转移的质疑和审查。尽管目前采取的几项“极端”措施可能在短期内调整到更加合理的水平，但旨在阻止洗钱或非法资产转移的限制仍可能继续。

高峥 合伙人

竞天公诚律师事务所

高律师于 2007 年取得中国政法大学法学本科学位，并于 2011 年取得美国西北大学法学院硕士学位。高律师在 2007 年于君合律师事务所开始其职业生涯。

高律师熟悉境外和境内资本市场中涉及境内权益的各种交易类型（包括各阶段的私募股权投资、上市、并购、发债及境外投资等），特别是对股权私募融资具有丰富经验。

高律师曾作为主办律师协助共数十家企业于境内外顺利上市；协助数家著名投资机构（包括美元及人民币基金）对数十家公司（多为高科技行业公司）进行私募股权投资。此外，高律师也协助20 多家境内外上市公司完成多个并购项目及发债项目。

姚坚 合伙人

竞天公诚律师事务所

姚坚律师毕业于北京大学，获得法学学士及经济学学士学位，并于美国华盛顿李大学获得法学硕士与博士学位。

2013 年，姚律师加入竞天公诚，具有八年以上执业经验。之前，姚律师曾在北京市中伦律师事务所工作四年。

姚坚律师的主要业务领域包括：海外投资、兼并与收购、能源与基础设施投资、基金和私募、外商投资。

在中国企业海外投资领域，姚律师曾为多家大型国有企业及大型民营企业提供境外投资全流程的法律服务。投资项目涉及非洲、东南亚、中亚、澳大利亚及北美等地区。其主要客户包括新希望集团、葛洲坝集团及庆华集团等。

姚律师于2008 年获得中华人民共和国律师资格，2007 年通过美国纽约州律师资格考试。工作语言是中文和英文。

胡铮铮 合伙人

竞天公诚律师事务所

胡铮铮律师于 2002 年毕业于南京大学法学院，取得法学学士学位；于 2004 年毕业于英国莱斯特大学法学院，取得法学硕士学位。胡律师于 2005 年开始工作于竞天公诚律师事务所，并于 2011 年成为合伙人。

胡律师的主要业务领域为资本市场、私募股权投资、外资并购和外商直接投资，涉及的行业包括房地产、矿产、新能源、增值电信、广告传媒、商业百货、制药以及其他多种传统制造业等。胡律师曾主要负责过多起中国境内企业在香港联交所、纽交所、纳斯达克及其他地区证券交易市场上市项目，并曾协助多家境外私募股权基金完成多宗涉及中国境内权益的并购和私募交易。

胡律师于 2006 年取得中国律师资格。胡律师的工作语言为中文（母语）和英文（流利）。