China's new rules on foreign takeovers of domestic companies have not dampened foreign investment but mainland firms are increasingly choosy about overseas partners, an industry expert said.
Concerns that foreign investment may slow emerged when the Ministry of Commerce imposed new rules in September last year, giving it the authority to screen and revoke deals that may 'impact national economic security'.
'I haven't come across any large deals that have been blocked as a result of the new rules and I haven't heard any complaints that approvals are not forthcoming,' said Christopher Chow, a partner at Ernst & Young in Beijing.
The value of merger and acquisition deals by foreign companies in the mainland tripled to US$31 billion during the five-year period ended 2006, according to Dealogic.
'People say the [Ministry of Commerce] rules are unclear but we have not heard any complaints from investors. The new rules have not decreased foreign interest,' Mr Chow said.
However, it appears that local authorities and domestic enterprises are heeding the government's call to give priority to the quality rather than the quantity of foreign investments.
'The consensus is there is no lack of money in the domestic economy and domestic firms are even getting picky about foreign investment. They want someone who can contribute more than cash, by improving technology or management skills,' Mr Chow said.