Mainland China recorded 281 deals in the first five months of 2003, with a total disclosed value of just over m7.5bn. By comparison, in the UK there were 1,662 transactions for m74bn, while in Japan there were 315 deals for m30bn. It is clear therefore that China is starting to emerge as a serious player in the mergers and acquisitions market.
From an M&A point-of view, the future for China looks bright. The government has recently introduced new measures — the Interim Provisions for Merger and Acquisition of Domestic Enterprises by Foreign Investors — which is essentially a definitive guide to foreign
acquisitions on the mainland.The State Administration of Taxation has also issued a notice stating that foreign companies that hold more than 25 per cent of a domestic firm through a merger or acquisition, will enjoy the same conditions as foreign-funded companies. This means that they will be subject to income tax of about 17 per cent, as opposed to 33 per cent for foreign companies.While China's dualtrack enterprise income tax is due to be unified in future,in the meantime the move is expected to encourage greater M&A activity.