提到中国并购市场，许多外国投资者可能会有些无奈。他们在中国遭遇的跨区域、跨文化的交流障碍让他们有些沮丧，渐进中的中国法律、政府监管的多变性以及对整合达不到预期目标的疑虑也让他们举棋不定。

　　如何既把握中国机遇，又能控制交易风险，加快交易推进速度？对于这些问题，笔者曾试图用来自成熟市场的经验和并购理论，解读中国市场上发生的并购现象，但是结果很令人遗憾。因为这些经验和理论，既不能解释一些看似不应该成功但依旧成功的案例，也不能解释，为何有些并购，遵循了各种并购理论和经验操作却依旧没有取得预期效果。

　　相反的，通过观察和分析近年发生在中国市场的跨国并购案例，以及笔者这些年参与的并购项目，笔者发现，了解中国的企业家和管理层关于并购的想法，以及了解监管当局的监管思路，更关键的，深入和全面了解中国的制度和文化环境，以及与并购相关的宏观环境，并因地制宜制定针对性的并购操作流程和策略，是那些成功并购案例的共性。比如，外国投资者需要了解：为什么中国的企业家迟迟不对一项并购交易点头；或者中国传统的"重实体轻程序"法律文化，如何影响到国家对外资并购监管；以及整合中为什么障碍重重；了解上述问题的原因后，如何对症下药，等等。这些将是本文要讨论的内容。中国俗话所说的"知己知彼，百战不殆"在这里也许又要再次得到验证了。


　　Why Your Chinese partners hesitate to make agreement?

　　Foreign investors often complain to me that transactions with Chinese companies will cost them more time than that with counterparts from Europe and the U.S, as far as the same type of deal is concerned.

　　This time-consuming problem seems to be typically made for China. However, through analysis of cross-border M&A cases in China, especially those in which I have participated, I have deduced that the length of time it takes should not only be blamed on Chinese companies or the Government's complicated scrutiny procedure, but also, in most cases, on the foreign investors themselves. When doing business in China，investors are always carrying out their M&A plans according to some fixed code without paying attention to what their Chinese partners are really concerned with. It follows, unsurprisingly, that the Chinese sellers are always seemingly and understandably smiling, but never nodding their heads at the negotiation table. At the same time, what the Chinese entrepreneurs care about and why remains a mystery.

　　I. "Is it imperative to an M&A deal？"

　　If you are negotiating with Chinese managers about a potential M&A deal, it is imperative for you to define your strategy first, because in their eyes, it conveys different meanings depending on different investors. For example, proposed M&A deals from industrial investors state that a company is to take control of another and that financial investors, a kind of equity finance, and strategic investors all have the ambition to push their company to merger or acquire other companies. In a joint venture, the deal is concerned with the cross-arrangement of roles between the Chairman of the board and the general manager, which in essence is the allocation of the company's decision-making right and executive right. The reason for that is the Chairman of the Board in China exercises part of the rights of the board of directors as well as the managers and is therefore being put into an awkward position of acting like a Chief Assistant of the board of directors and the Chairman of the Board to some extent.

　　Most of the Chinese enterprise owners are not willing to sell 100% of the equity in their companies, or perhaps a controlling percentage. Obviously the relevant parties, whether the head or the managers of State-owned enterprises or the controlling shareholders of private companies must be take very seriously because of the decision they makes power in the company.

　　In the case of SOFEs，in addition to the above-mentioned owners, more factors are to be taken into account, for example, the supervisory authorities, government agencies and those that can exert influence on M&A deals. Their attitude towards the deal as well as the relationship between them will definitely affect a SOFE M&A deal in China. Furthermore, you will accelerate your transaction if you make it clear to your potential Chinese partners at the very beginning your purpose for the M&A deal or general cooperation purpose.

　　In the case of private companies, most entrepreneurs are having great success in transitional China. Such success inspires them to challenge their practical ability, and their "wading across the stream by feeling the way" experience has unconsciously fostered their brave but not reckless spirit of adventure. Even if their enterprises are in a market of full competition, they would choose not to sell them as long as they are able to operate on at very narrow profit margins. They are also very keen on their ability to operate the enterprise.

　　Thus, when buyers from mature markets forecast the industry trend with the 'industry-evolving' theory and actually take action towards a merger, their Chinese peers are slow to participate, either because they do not think threats will be posed to them or because they take it for granted that they will never be lucky enough to be one of the few "one hundred years enterprises".

　　Furthermore, increasing asset values have confirmed their assumptions that the enterprise may be of more value to a merger or acquisition in the future. As a result, they treat their enterprises as appreciating investment for themselves instead of tools for producing a good return for shareholders. The emotional attachment of entrepreneurs to the enterprise makes it ever more difficult for them to give up their controlling right, which means they would always hesitate to continue the deal whenever scruples occur.

　　What really attracts Chinese enterprises and truly gains their interest is the investors who can help their company to develop more quickly to lead the industry or turn their company into a candidate for a "one hundred years enterprise", or at least help their company get out of a financial dilemma. This is exactly what financial investors are doing for Chinese enterprises, and it is no wonder that more attractive opportunities in China are awaiting them.

　　2. "M&A, a prelude to SOFE?"

　　If you keep a close eye on the M&A and JV activities of multinational corporations in China, you will find that some of them are entering into M&A deals with the intention of setting up an SOFE. A foreign investor would set up a JV with or takeover a Chinese enterprise, then the cooperation enterprise woul make a loss with the rising cost of introduction and management and little market share increase. Then, by attributing capital, the Chinese shareholders' equity would dilute, and then finally the foreign investor would take 100% of the equity of the corporation. Such a cooperation model serves as a warning to the Chinese enterprise, arouses fear in them and makes them easily reject future potential JVs or M&A deals.

　　The best way to eliminate their worries is to tell them your cooperation purpose at the very beginning, listen to their concerns and ensure them what arrangements will be made to guarantee that their concerns will never materialise. For example, a foreign corporation acquired a state-owned enterprise in one province of China, but the SOFE were short of M&A experience and had a lack of ability to forecast the M&A result and its future development. Its foreign partner took advantage of all these aspects in the deal, and the actual result after the acquisition was far from meeting its expectations. As a result, most of the enterprises in that province are now resisting foreign M&A approaches..

　　3. "Where is my cheese?"

　　In acquiring a Chinese enterprise，multi-national corporations always provide a list of terms or put forward a complicated negotiation plan, and then proceed with the deal according to their fixed operational procedure. "Such kind of working-flow operation method really annoys us", says one manager from China. Their highest concern is what profits they will gain from the deal, that is, what actual value and benefit will be brought to them (they call it "the essence of the deal"), but they are never concerned with the other complicated and dull procedure involved.

　　As the old Chinese saying goes, "know oneself and the other side is undefeated in many battles", foreign investors should keep in mind the following tips when they are doing M&A business in China：

　　Build trust
　　Tell your Chinese Partner what benefit they will gain
　　Grant your investment team necessary rights

　　How to understand China's regulatory environment and Regulatory Environment and M&A Market

　　China, in its transitional period, is a land full of opportunities. However，the most promising industries for foreign investors are always those prohibited or restricted by the Chinese government. Therefore, it is essential to have a sound understanding of China's M&A market and its regulative environment to design a feasible cross-border merger or acquisition legal structure. The following points are to be kept in mind when conducting your M&A deals in China：

　　1. Chinese regulators are more concerned with substance than with procedure.
　　The traditional legal culture in China is more concerned with substance than with procedure. It follows that sometimes in a cross-border M&A deal, even if a foreign investor has abided by all the procedure prescribed by PRC regulations, he is ultimately refused by the Chinese regulators. Here is a typical case:
　　In a traditional red-chip model for listing in overseas markets, for the purpose of financial statements consolidation, the offshore company will take over the domestic company by acquiring a more than 51% stake. This method normally works but it fails when it come to China's restricted or prohibited industries. In such circumstances, some Chinese companies come out with a new way to consolidate the financial statements, that is to list overseas by the means of VIE, which, by contractual arrangements, transfers the benefits of the domestic company to the off-shore company, without transferring its stake control. This once-feasible model ceased to work since September 8, 2007 when a new M&A law entitled "Regulations for Merger with and Acquisition of Domestic Enterprises by Foreign Investors" came into force in China. The Regulations reflect the view of the Chinese government that a more substantial regulation of M&A deals by foreign capital is needed, not just to keep an eye on its procedures but also on its essence. Therefore, it introduced the principle of "actual control", which indicates not only procedural but also substantive supervision and control from the government on a cross-border M&A deal in China. For example, the parties in a foreign M&A deal are required by the new M&A law to disclose their management relationship and their actual controllers to the approving authorities. A merger or acquisition investment actually controlled by domestic companies, enterprises or natural persons is required to be reported to the Ministry of Commerce of PRC for approval. In addition, the new law prohits parties from evading government regulation by way of trust, holding shares on behalf of others, or other means.

　　2. The market credit is building up in China.
　　The very public Dannon & Wahaha case in 2007 attracted attention at home and abroad. In that case, some people tried to make use of the support of local government and the people's strong feelings of national identity in order not to admit and perform the contacts with Dannon. This aroused foreign investors' concerns about market credit in China. They worried whether a contract would be well informed by their Chinese partners. Take the VIE model again for example, where foreign investors transfer their profits to the offshore companies through a series of contractual arrangements, such as exclusive technical consultation and service contracts, equity pledge contracts, etc. This means that the transfer of profits is entirely dependent on the parties' performance in good faith, because any breach of a contract will cause great losses to the listed company. For example, if the domestic party refuses to pay profits to the foreign party, the listed company will become nothing more than a mere shell.
　　However, the positive aspects we can see in that case is that many entrepreneurs did not stand on the side of the people we mentioned above, they believe that "a contract is a contact". A valid contract should be respected and well performed. All this conveys the fact that an increasing number of Chinese entrepreneurs and managers are taking a more rational and objective attitude forwards foreign M&A deals as well as business rules. Thus, market credit is building up in China as a result.
　　3. More effective communication with supervisory authorities equals more opportunities in China
Based on the current stage of economic development, supervisory authorities must let M&A deals take place first before they make any proposed regulation upon them .This will obviously brings about great uncertainties in M&A investment in China. In other words, Companies can still not engage in some activities that are not necessarily prohibited by law. In addition, those industries restricted by law can still be invested in and even sometimes be made into exceptions to the rule. It is therefore very important to know how to conduct a persuasive conversation with the regulators. To achieve this, foreign investors have to provide the Chinese authorities with good reasons, showing that their merger or acquisition will bring more benefits than possible risk. The cogent reasons include but are not limited to: the capital, high and new core technology and the advanced managerial approach brought in by their investment, and they could also promote the less obvious potential value that will be brought, such as the ability to explore and select an excellent item on an international perspective. A typical example case we can refer to from recent years in China's market is that of a little-known private company in a smaller Chinese province, which is taken over by a foreign Private Equity firm, and then later to be found being listed in an overseas securities exchange market like the NYSE or NASDAQ stock markets. Investors in China will then come to realize the potential promise in the company.
　　Thus, if foreign investors make a real effort to communicate effectively with the Chinese supervisory authority, more opportunities will be there for them.
　　In conclusion,, the stage China now is undergoing indicates that many things developing from scratch. and the notion of innovation is therefore vital. That is to say, it is not necessary that deals will fail to work where there is no precedent, and vice versa. As for cross-border M&As in China, foreign investors are advised to develop a sound understanding of China's regulative logic and M&A environment in order to be able to draft a legal structure that will really work. They must make bold hypotheses and follow it up by a meticulous search for evidence.

　　How to break through the bottleneck of Integration
　　1. Seeking for harmonious co-existent
　　For those experienced in M&A in China, it is clear that investors are used to weighing Chinese M&A deals against the European standards and conditions, due to a much longer history of such deals in Europe. However, regard should always be had to the circumstances of a particular deal.. A Chinese literary quotation reflects on the situation, stating that when tangerine trees grow south of the Huai River, then they bear tangerines; if they grow north of the Huai River, then they will bear citrons. Why is it so?; because the soil and water is different. Lack of adjustment to detail in an M&A deal and especially the varying circumstances in a new environment, will result in reduced prospects for the deal and its satisfactory completion.

　　M&A transactions conducted by foreign company investors is very typical. Mostly, in that kind of M&A, a bigger company acquires a smaller one. It seems like a mismatched marriage, where everything needs to change. After conclusion of the deal, altering and assimilating the newly acquired company is the aim of the integration period. After the purchase, with the advantages of advanced management experiences, enriched capital, a worldwide famous brand and access to better technology e.t.c., the multi-national company will always rigorously assimilate the target company to it, consciously or unconsciously, and absorb it into the global unified management system. They not only ask the target company to be connected with all of the major departments, but also try to change all of the target company's management system. At this time, the "colonial coup" often collides with shareholders, management members and employees, producing an increase of difficulties in the integration period.

　　However, integration between the financial investors and the target company is more flexible. Understanding, amalgamation and connection take the place of conquest. Their relationship is like that of a loving couple, who adapt to each other easily and almost naturally. They also adopt an admirable system using trusts and shares to exert the counterpart's advantages and allow more value to be generated. Therefore, the integration between the two is much more smooth and favouring.

　　2. Eliminate worries and together all parties will cooperative and work for common benefit

　　After the deal, because of the need to boost operating efficiency, making regular reforms is unavoidable, needed to induce financial transparency etc, and will definitely increase management costs. At that moment, the target company's shareholders will feel discomposure, because they are afraid the change will affect their anticipated benefit and they will lose more than they have gained. It is not surprising. If foreign investors focus only on the transaction without standing by the target company's management and shareholders, ignoring their concerns, the Chinese companies will never be passionate and sincerely convinced, and actively participate in the integration process. As a result, the difficulties will increase, and the integration process will become tedious. Wise investors will let the target company's management and shareholders realise that although the cost temporarily increases, this change will generate more value for the company in the long term.

　　Therefore, as an old saying goes, ("the man who loves himself truly will love other people the same"), it is very important to bring about the operation of the deal when the buyer insists its strategic aim, by paying the same attention to the worries of target company's management and shareholders, then fully grasp and eliminate those worries at the right time.

　　3. Integration can not be overhasty
　　Insufficient integration is always considered the main factor which leads to a failure of an M&A deal. In a cross-culture and cross-area M&A transaction, cultural integration is where the difficulties lie. The transfer of an enterprise's culture mainly relies on the transfer of thoughts and values, which means such a transfer cannot be achieved in a short period. Over hasty handling of the integration causes companies to conform to cultural differences unsuccessfully.

　　There are golden rules to follow, deduced from successful experience of financial buyers: admit and respect, consummate and do not shift the target company's culture, institution and process, and reach mutual consensus in other to successfully cooperate. is the foundation of successful cooperation.

　　This point of view can also illuminate those non-financial buyers. In addition to, the essential elements which must be the same in all situations, more allowance should be given to the target company's inherent systems and processes. Distinguishing those essential parts and choosing the right time to conform to the multinational company's operating system is a key point.