On The Development Of The EU Security Review System For Foreign Capital Mergers And Acquisitions And China’s Response

Since the 1980s,foreign mergers and acquisitions have gradually emerged and developed rapidly,even surpassing greenfield investment as the main mode of FDI.The development of foreign capital mergers and acquisitions will have a double-sided impact on the host country.While foreign capital’s entry into the market of the host country brings positive effects,it may have a negative impact on the market competition order and public interests of the host country,and even threaten national security.Therefore,in order to prevent such negative effects and maintain the balanced development of foreign m&a and national security,the security review system of foreign m&a emerges at the right moment.The EU is different from common sovereign states,but as a regional economic organization with the highest degree of integration,the EU also tries to establish a unified security review system for foreign mergers and acquisitions.In recent years,the Chinese government has been loose at Chinese enterprises overseas investment policy,triggered the SBC overseas m&a boom,Chinese large-scale influx of European Union countries,especially for Europe’s core infrastructure and the core technology companies in the field of acquisition,seems to be the EU industry competitive advantage pose a threat,and therefore part of the EU member states began to strengthen domestic foreign regulatory means,not only to tighten foreign policy,and urged the European Union level to build a unified system of foreign capital m&a safety review.But subject to the principle of "the principle of free flow of capital"and for a long time to open loose foreign policy,the European Union under the impetus of the internal and external factors,while at the legislative level is proposed to establish system of foreign capital m&a security review draft,made up the legislation of the EU level,but the draft is only the choice between the free and open market and investment protectionism compromise,its essence is established between the members and the committee of foreign capital m&a security review mechanism of cooperation,not gives any substantial obstacles to the committee on foreign mergers and acquisitions,Rather,it is up to the member states concerned to have the final say on the approval and final decision of specific m&a transactions.The current draft of the EU foreign investment review has come into effect,but there are many problems in the draft,which bring great uncertainty to foreign investors,especially Chinese enterprises’ mergers and acquisitions in the EU.Although the adoption and entry into force of the new draft can make the EU ’s foreign investment supervision system more complete,it also means that Chinese enterprises may face multiple reviews on their future mergers and acquisitions in Europe,and will also face more legal,policy and even political resistance at the EU level.Although the "irrational" m&a of Chinese enterprises to EU enterprises is restrained at present,the overall scale and speed of m&a of Chinese enterprises in Europe are still rising.In view of the complexity of EU ’s external m&a review system,China should accelerate the reform in the context of the ongoing BIT negotiation between China and EU.At the national level,we should not only establish a risk prevention mechanism for Chinese enterprises’overseas mergers and acquisitions,but also strengthen high-level political dialogue between China and the EU to enhance mutual trust and improve the investment environment.We will improve our legal system for reviewing overseas mergers and acquisitions,focus on harmonizing the investment rules between China and the EU,and relax restrictions on foreign investment access.We should strengthen policy guidance and standardize rational mergers and acquisitions of Chinese enterprises by European enterprises.From the perspective of Chinese enterprises,they must be familiar with the EU ’s foreign investment policies and legal changes,timely adjust the merger and acquisition strategy for Europe,and make legal and human resources preparations with the help of relevant intermediary agencies,so as to cope with the EU ’s constantly changing legal and political environment for foreign investment mergers and acquisitions.In view of the security review system may take effect,SBC to establish internal risk control mechanism,timely adjust the m&a strategy,choose an appropriate time to enter the EU market,also should be actively sought and give full play to the power of professional intermediaries,in addition to the state-owned enterprise merger and acquisition,should deepen the system reform of state-owned enterprises,independence to timely handle the final SBC itself should also improve the ability of independent innovation,the development of national brands,to abandon cling to merger and acquisition of foreign companies to develop their own wrong ideas,this will help Chinese companies more successful mergers and acquisitions in Europe in the future.