Mofcom delegates authority

Author: | Published: 1 May 2009

China outbound M&A grew rapidly in 2008 and the first quarter of 2009. According to the Ministry of Commerce (Mofcom), China made overseas direct investment of $52.15 billion in 2008, rising sharply from $26.51 billion in 2007. More than 42 outbound M&A transactions were conducted by Chinese companies in 2008, including some very big and important for their sector.

But outbound M&A can be slow. Although it has government support, it is subject to strict control. This is driven by China's long-standing foreign exchange control and regulatory supervision over domestic capital. Generally, outbound M&A must obtain approval from the National Development and Reform Commission (NDRC), Mofcom and the State Administration of Foreign Exchange (Safe). In addition, if an overseas acquisition involves state-owned companies, approval is also required from the State Asset Supervision and Administration Commission (SASAC).

Depending on the nature of the Chinese acquirer,...