Legal outlook for outbound mergers & acquisitions in 2017

The number and value of outbound investments by Chinese enterprises have been rising exponentially in recent years. According to statistics announced by the Ministry of Commerce (MOFCOM), domestic Chinese investors spent about RMB1.07 trillion (US$154.63 billion) in overseas investments between January and November 2016, up 55.3% year on year. Outbound M&A has been adopted by more and more Chinese companies as a common means of overseas investment.

In the meantime, however, deglobalization has become a powerful trend across the world, evidenced by the Brexit vote and the victory of Donald Trump in the US presidential election, and it has complicated the international political and economic landscape. Chinese enterprises are facing drastically changing internal and external circumstances as they prepare to splash out in foreign markets.

DEGLOBALIZATION

The most prominent change in 2016 must be growing populism around the world. In general, populism is a political style of action that challenges the authority of the mainstream under the pretext of protecting the interest of the ordinary public. Populists in many countries are blaming their economic stagnation on globalization, claiming economic globalization has brought little benefit to the lower class, but instead widened the wealth gap and caused job losses. Their strong opposition to trade liberalization and globalization has exposed some investment liberalization treaties to more uncertainty.

Lin Zhong is a partner at EY Chen & Co. Law Firm