There are many ways a U.S. business owner could enter into the Chinese economy. They could form a new business in China. They could enter into business ventures with Chinese corporations. They could also invest in or acquire a Chinese company.
Whatever method a U.S. business owner chooses for extending their business efforts into China, there are many things that could have significant impacts on how their entry into this market goes.
One is how they handle the legal matters particular to the specific method of entry they decided on. Now, when dealing with business-related legal matters in a foreign country, having the right information can be vital. So, seeking out advice from a lawyer knowledgeable of the legal considerations related to doing business in China can be important for U.S. business owners who are entering the Chinese market.
Another thing that could impact U.S. business owners who are establishing a business presence in China is how China treats foreign businesses as compared to domestic companies. A common complaint among foreign companies that do business in China is that there are aspects of the Chinese legal system that tilt things against foreign businesses. What challenges and restrictions foreign companies face in China are among the things it can be critical for business owners in the U.S. to factor in when coming up with their overall strategy related to doing business in China.
A U.S. entrepreneur’s business efforts and interests in China can also be impacted by U.S.-China trade relations. Lately, there has been a fair amount of tension and uncertainty when it comes to such relations. Some are pointing to this as a significant contributor to recent drops in acquisition activity by U.S. businesses in China.
According to recent data, $523 million in merger and acquisition activity involving U.S. companies occurred in China in 2017’s opening half. This is a good deal lower than the totals past recent years saw. For example, in the first half of 2015, such activity totaled out to around $4 billion. In fact, the total from 2017’s first half was the lowest total in 14 years.
One wonders if the rest of 2017 will also see increased hesitancy by U.S. companies to engage in acquisition activity in China.
Source: Reuters, “Value of U.S. deals in China sinks on rising trade tensions,” Sumeet Chatterjee and Kane Wu, July 28, 2017