Coke and Huiyuan: The Real Rules for Foreigners Buying Chinese Companies

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So the Finanace Ministry rejected Coca Cola’s $2.5 billion bid for China’s biggest juice maker, Huiyuan. The pruchase would have broken the new anti-monopoly law, apparently. There’s plenty of good balanced analysis out there from the likes of Bloomberg and others about why this happened. But over at the China Law Blog, we get a refreshingly blunt  (and rather smugly self-congratulatory but I guess they have reason to be so) cut-to-the-chase look at the real (if unspoken) rules for foreign investors trying to buy mainland companies: 

Foreigners are permitted to purchase small Chinese companies that the central government is not interested in managing.Foreigners are permitted to purchase large, state-owned enterprises that suffer from financial difficulty, provided the foreign investor agrees to restructure the purchased company.

Foreigners are permitted to purchase non-majority interests in strong, successful Chinese companies, but only if there is some added benefit, such as transfer of technology, advanced management or access to foreign markets.

Foreigners are not permitted to purchase a majority interest in a large and financially successful Chinese company. Even smaller companies are off the table if they are financially sound and work in a core technology field or have created a strong or historically important brand.