Foreign acquisitions of Chinese companies follow the FDI filing regime plus anti-monopoly (SAMR merger control) review above thresholds, with sector-specific approvals for restricted industries. Share vs asset deals have very different tax outcomes.
Process outline: (1) Target screening — verify licenses, tax health (fapiao history), assets, and any outbound investment compliance of the target itself. (2) Structure: equity acquisition is standard; asset deals transfer licenses one by one and trigger VAT on asset transfers. (3) Sign SPA with conditions: SAMR merger control if combined turnover exceeds thresholds (2024: RMB 12 billion China turnover of acquirer group + RMB 800 million target, or RMB 4 billion + RMB 800 million), sector approval if negative list, and shareholder/creditor procedures under Company Law. (4) Payment: foreign exchange via FDI reinvestment account; consider earn-outs carefully — Chinese courts enforce them but structure mechanics matter. (5) Post-closing: update registration, chops, bank mandates, and integrate tax setup. Due diligence emphasis for China targets: undisclosed related-party loans, personal guarantees, social insurance underpayment, and fapiao irregularities — these are where Chinese deal value quietly leaks.
Work with licensed professionals
Zhonghui Consulting — cross-border compliance engagements, fixed fees, English-speaking delivery team.
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