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This draft document, which aims to standardize M&A behaviors and entry thresholds for foreign investment in China's equipment manufacturing industry, has already completed the first draft and is currently being discussed by the National Development and Reform Commission and the parties. After soliciting opinions and revisions, it is expected to be worked by the State Council in the near future. The hall officially announced.
As one of the drafters of the “Notification on the Measures for Safeguarding Economic Safety and Industrial Security Review in the Equipment Manufacturing Restructuring (Investment Cooperation)†(hereinafter referred to as the “Noticeâ€), the Deputy Secretary-General of China Machinery Industry Federation Director Yong Yongbin of the Major Technical Equipment Office gave an exclusive interview with this reporter last week to introduce this document in detail.
It is understood that apart from this document, the State Council is also planning to establish an inter-ministerial joint conference similar to the Foreign Investment Review Committee. The coordination agency led by the National Development and Reform Commission, the Ministry of Commerce and the Ministry of Finance will participate in the equipment manufacturing industry. All major foreign mergers and acquisitions projects were reviewed.
Foreign M & A "Three Doors"
According to Yan Yongbin, the document (or regulations) will restrict foreign mergers and acquisitions in equipment manufacturing from three levels:
The first is to identify a group of companies, numbering 20 to 40, and protecting them by name. These enterprises cannot be controlled by foreign companies and will be issued in the form of documents from the State Council.
The second is that a group of sensitive industries can not be controlled by foreign capital, such as nuclear power equipment, 600,000 kilowatts or more of thermal power generators, and more than 5000 kilowatts of centrifugal compressors used in the petrochemical industry, etc. Holding, this restriction can be defined in the form of regulations;
The third is that the standardized procedures for M&A behaviors are: First, strict examination and approval, stipulating that more than a large-scale project must be examined and approved by the central government; second, scientific decision-making; not only the local leader should have the final say, but also must fully listen to the business operators. Opinions and establish expert commentary system.
Now, all three options are possible options for the new regulations. In the “Notice†seen by reporters, there are 20 companies listed in the list.
Not only that, the document also requires the establishment of post-assessment and accountability mechanisms for mergers and acquisitions of foreign investment projects. According to Yan Yongbin, half of all foreign capital M&A projects in the equipment manufacturing industry are unsuccessful. Therefore, if the relevant responsible person neglects his duties and colludes with foreign investors and causes the loss of state-owned assets, he will be held accountable for his legal responsibilities in accordance with the law.
Such stringent restrictive measures not only provoked controversy in the industry and related competent authorities, but even the Machinery Federation had different voices inside. Yan Yongbin said that some people objected, but most people said they were in favor of it, and even that the head of the people should have greater tension.
It is reported that the topic discussed at the State Council office meeting on March 8 is about foreign capital mergers and acquisitions and industrial safety. The meeting was chaired by Vice Premier Zeng Peiyan. The ministers and deputy ministers of the 10 departments including the National Development and Reform Commission, the State-owned Assets Supervision and Administration Commission, the Ministry of Commerce, the Ministry of Finance, the People's Bank of China and the Machinery Federation participated in the discussion.
According to Yan Yongbin who attended the meeting, the meeting has clearly conveyed the attitude of the top management of the central government that foreign mergers and acquisitions may bring about hidden dangers in industrial safety. They believe that it has "importance and urgency," and require that relevant regulations be established and established as soon as possible. A joint meeting of major ministries.
“Meeting minutes were only distributed to the participating units and were not issued to the grassroots. Now many local governments and enterprises are still speculating on the central government’s attitude on foreign investment issues. In fact, the attitude of the central government has already been clarified,†Yan disclosed.
Domestic Equipment Manufacturing Industry Sets Foreign Merger & Acquisition Triple Door (1)
The U.S. Carlyle, who is anxious to acquire China’s Xugong, may end up on a “red listâ€. The Chinese government is working on a document that plans to clearly list a list of 20 to 40 companies. It will directly name protection in the form of a State Council document, prohibiting these companies from being controlled by foreign companies.