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The road to success / 通向成功之路

Completing outbound investment in an increasingly regulated world
Concerns about foreign investment remain high on the political and regulatory agenda, with several high-profile deals being blocked in 2017 and 2018 (especially in the US), as well as proposals to tighten foreign investment screening regimes in the US, EU and UK.
While the pace of outbound investment from China has declined in 2017, Chinese outbound investment will continue to be a significant global force over the long term. We estimate that Chinese outbound investment flows may come to $1.5 to $2.5 trillion over the next 10 years.

Chinese outbound investment flow may reach


over the next 10 years

Our new report, published to mark our participation in the China Development Forum in Beijing, describes major developments in barriers to foreign investment in major economies such as the US and EU, and offers recommendations for businesses seeking to complete such foreign investment successfully.

> Download your copy of the report. 

> Download your copy of the report (Chinese language version). 

Key recommendations

Some of the key recommendations drawn from our experience include:

Expect tightening controls in a widening set of sectors

Chinese investors need to be prepared for concerns from foreign governments and regulators in an ever-widening set of sectors. Last year, we described the spread of regulatory and governmental concerns into areas of “critical infrastructure”.

We are now seeing additional concern in relation to investments into businesses with a significant data or cybersecurity aspect to their operations.


Timing is vital

Working with the right partners and the right deal structures is very useful – but getting the timing right is vital. New legislation being considered in the US and Europe may make previous approaches to investment (e.g. using acquisition vehicles, or developing partnerships to license sensitive technology rather than acquire the owners of such technology) more difficult.

Transparency is increasingly important

Greater transparency to help foreign sellers, regulators and governments to better understand Chinese regulatory and business processes would be very helpful. This is particularly helpful because a significant proportion of Chinese bids have reportedly been abandoned because of issues with regulatory or business approvals in China itself.


Recent developments

January 2017

delayed deal
HNA announces acquisition of US investment firm SkyBridge, which has subsequently faced repeated delays in being approved by CFIUS (the Committee on Foreign Investment in the United States)

April 2017

cancelled deal
US-based insurer Fidelity & Guaranty terminates $1.6 billion acquisition by Anbang, reportedly on US regulatory concerns

July 2017

political and regulatory changes
Germany strengthens rules on foreign investment control.

cancelled deal
In the US, HNA abandons its investment in Global Eagle Entertainment, an in-flight entertainment provider, after failure to obtain CFIUS clearance

August 2017

political and regulatory changes
China’s State Council releases a policy statement on the “direction and regulation” of outbound investment. It classifies outbound investments into “encouraged” (e.g. Belt & Road projects), “restricted” (e.g. real estate, hotels, etc) and “prohibited” (investments that endanger national interest and security)

September 2017

cancelled deal
US President Donald Trump blocks acquisition of Lattice Semiconductor Corp by Canyon Bridge (a Chinese fund) on national security grounds.

completed deal
In the UK, Canyon Bridge agrees acquisition of Imagination Technologies (a chip designer), along with an undertaking that Imagination’s US business would be sold off separately to mitigate CFIUS concerns.

political and regulatory changes
In the EU, the European Commission publishes a proposal for a new regulation for “Investment Screenings” to establish a framework for EU Member States and the Commission to screen FDI into the EU.

October 2017

political and regulatory changes
UK government publishes consultation paper on proposals to strengthen powers to scrutinise and screen foreign investments

November 2017

Several deals abandoned, modified or delayed:
cancelled deal

  • Zhongwang’s acquisition of Aleris (called off on CFIUS concerns)
  • Orient Hontai’s acquisition of Applovin (turned into a debt investment)
  • CEFC’s investment in Cowen Incorporated (called off on CFIUS concerns)

delayed deal

  • China Oceanwide’s acquisition of Genworth Financial (delayed to April 2018 on CFIUS concerns)

political and regulatory changes
In the US, “FIRRMA” (Foreign Investment Risk Review Modernization Act) is proposed to toughen US foreign investment screening and expand CFIUS’s scope.

December 2017

political and regulatory changes
China’s National Development and Reform Commission publishes a directive of rules on outbound investment that took effect from 1 March 2018. The new directive expands the scope of transaction structures that are subject to scrutiny, expands on the definition of “sensitive sectors” (investments in which NDRC approval is required), and requires the NDRC to consider the impact of outbound investments on the national interest and national security.

In the US, Trump administration announces its new National Security Strategy, outlining concerns on technology leakage and describing China as offering a “challenge” to American interests

January 2018

cancelled deal
In the US, Ant Financial abandons its acquisition of MoneyGram International on CFIUS concerns.

delayed deal
German government intervenes in the acquisition of Cotesa, an aerospace parts manufacturer, pausing the transaction to see if it complies with Germany’s new law on foreign investment.

February 2018

cancelled deal
The US SEC blocks the sale of the Chicago Stock Exchange to a group of China-based investors.

completed deal
China’s Geely Group acquires 9.7% stake in Germany’s Daimler

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