Understanding the landscape

Common misperceptions about M&As in China:

· Westerners often misinterpret the impact of the Chinese cultural phenomenon of guanxi, which they misconstrue as a murky system of "connections" or "relationships", on the regulatory approval process. Guanxi is actually rooted in empathy - the concern for someone else's interests when taking an action of one's own. Thus, each regulatory body will be looking for signs that an acquiring company understands, and has a plan for addressing, the social as well as economic considerations that fall within the parameters of the regulator's authority.

· The acquiring company should not think that it can fully delegate the management of the approval process to a third party. The authorities will want to see that the company is actively involved in the deal.