Investment in tech fields abroad

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    According to a report by Mergermarket, the boom in offshore investment by Chinese enterprises since the beginning of the year has continued apace, establishing a new record for the total value of transactions at US$131.1 billion, an increase of 225.3 percent compared to last year; and the value of M&A transactions stood at US$204.5 billion, a decrease of 27.2 percent compared to last year. With the uncertainties raised by the UK vote on Brexit and the American presidential election, M&A activity may see a drop in the second half of the year.

    PIAO YU Senior Partner Tian Yuan Law Firm
    PIAO YU
    Senior Partner
    Tian Yuan Law Firm

    However, with the adjustment in the domestic economic structure, and looking at the statistics on various types of transactions, it can be seen that the tendency for Chinese entrepreneurs to go for overseas acquisitions in technology fields is increasingly obvious, with the most active investment destinations being the US and Europe, particularly those regions where high-tech industries such as communications, media, etc., are well developed.

    Among the typical transactions that have been made public in the last year are Lenovo’s acquisition of the IBM X86 server business for US$2.3 billion and its acquisition of Motorola Mobility Holdings, Inc. from Google for US$2.91 billion; Tsinghua Unigroup’s US$910 million acquisition of RDA; and Huawei Technologies Co., Ltd.’s pivot to Europe where it bought out Neul, a UK internet-of-things company, for US$25 million, and acquired an equity interest in the UK’s XMOS for US$28 million.

    In addition to the offshore tax planning and anti-trust reviews that are usually involved in acquisitions, such transactions present other commonly encountered issues that require close attention.

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    Piao Yu is a senior partner in the corporate M&A practice group of Tian Yuan Law Firm. She can be contacted on +86 10 5776 3888 or by email at yupiao@tylaw.com.cn