China’s commercial and regulatory landscape continues to change rapidly. Whereas business growth in China was once dependent on capital injection from multinational corporations (MNC), the tables have now turned and MNC’s are increasingly keen to reposition themselves in the China market through a combination of M&A, consolidation and/or joint ventures. This opportunity carries a number of inherent challenges, as local competitor brands become more competitive, and thereby more attractive to local investors.
Responding to signals in the market, King & Wood Mallesons has established a strong M&A and competition practice, designed to equip businesses with smart decision making tools to enable their China strategy.
A US based, fortune 500 multinational corporation (MNC) intends to consolidate its industrial business in China. Currently they have multiple manufacturing entities operating in Tianjin, Shanghai, Qingdao, Suzhou, Hangzhou and Guangzhou. A holding company was established in Hong Kong to hold the equity interest in the Chinese entities. With total China sales at around US$6b, the Executive team are looking to further expand the China business through (i) acquisitions of related assets, (ii) establishment of joint ventures with local partners for certain strategic business activities, (iii) consolidating the group’s own supply chain, designs and parts supply, and (iv) disposal of non-core business.
AQ in action
- Using our in-depth knowledge of cross-border M&A expertise and antitrust/competition law, we identified potential challenges early, and provided suitable strategies to work around them.
- Due to our long term working relationship with this client, our knowledge on their business activities allowed us to provide result oriented legal solutions which are appreciated by the client’s M&A, operation and legal teams.
- Our good working relationship with various local authorities played a positive role as we were able to connect our client with various agencies on a timely manner to effectively move various projects forward.
The deal requires a regular dialogue with the client, where face-to-face contact is extremely important. In response, we established a core team in Shanghai to advise and support the client, and in close proximity to their office location, when required. We used this as an opportunity to deepen our knowledge of the business, and able to better anticipate future legal issues that may impact them.
We were able to connect the client to our broader Mainland China network with access to expertise and knowledge that will help them to consolidate their business and plan for the future more effectively. This provided the added benefit of having up to the minute legal advice across the full spectrum of commercial law.