Mainland mergers complex and drawn out

James Renwick, The China Post

Reports highlighting the potential for making a fortune out of investing in mainland China currently abound in Taiwan and can be seen on the shelves of bookstores and in the media. However, as experts from Taiwan, the mainland, and Hong Kong who gathered this week at a conference organized by the Taiwan branch of international investment banking advisor Price-waterhouse-Coopers pointed out, completing a successful merger with or acquisition of a mainland company is a complex and drawn out process. Different ways of doing business, state controls, problems with the supply of funds, outdated management styles of mainland Chinese companies, and a lack of transparency in the operations of businesses were just some of the many problems that legal and financial experts highlighted as barriers to cutting a deal when entering the market of mergers and acquisitions. Experts at the conference emphasized the need to understand the Chinese market, and to build up a complete picture of target businesses, a process that can take from 8 months to a year of work. “There are very few legal guarantees to fall back on when looking to buy parts of companies, especially former state owned enterprises where the different parts of a company and its ownership are often very unclear,” said Price-waterhouse-Coopers Chief Executive (CEO) of the company’s operations in Taiwan. However, economic liberalization on the mainland has meant encouragement for greater and continued investment from outside sources and many companies are seeking the help of investment consultants in pursuing corporate financial strategies there. “Despite the fact that Beijing is uncomfortable with the current government in Taiwan, economic relations are being formed at an ever more rapid pace, and unless a company from Taiwan has previously taken up a political position offensive to Beijing, the complexities of cross-strait relations don’t play a large part in the process of doing business,” Hong added. Speakers at the conference were optimistic about the entry of mainland China into the World Trade Organization (WTO), which they said would bring more opportunities for mergers and acquisitions because of the lifting of limits on financial services, and the continued deregulation of the Chinese economy.

The conference was an opportunity for companies seeking a foothold in the mainland through mergers and acquisitions to obtain a professional opinion from legal and accounting experts and to discuss the ups and downs of doing business with companies there.

Price-waterhouse-Coopers acts as a financial consultant for companies looking for investment opportunities in the mainland. It identifies merger and acquisition openings and uses its financial and legal expertise to advise its clients in everything from mainland laws to investment viability right up to the point of cutting a deal.