- within Food, Drugs, Healthcare and Life Sciences topic(s)
Acquiring rights to U.S. and European technologies has become a priority for Chinese companies—as well as national policy. "Large state-owned companies possess phenomenal production capacity, but generally lag in R&D and technological advancement," says Morrison & Foerster Beijing-based partner Sherry Xiaowei Yin. "Acquiring technology assets allows them to diversify their products and ascend the global supply chain." Also in Beijing, Morrison & Foerster partner Thomas Mannotes that "small to medium-sized U.S. companies in cleantech, IT, and biotech are attractive targets."
This fast-expanding deal cosmos has unique complexities, starting with U.S. government security concerns over sensitive technologies. Differing corporate governance, financial reporting, and accounting standards can be thorny, too–along with a transactional learning curve.
"As a group, Chinese acquirers are diverse players with individual constraints," says Hong Kong-based Morrison & Foerster partner Thomas Chou. "Not all are experienced in outbound M&A deals, or in navigating the U.S. regulatory framework."
Still, Chinese executives, returning with lessons learned in the U.S., are growing more sophisticated. "Securing IP assets is a priority," says Morrison & Foerster partner Janet Xiao. "Yet parties often overlook due diligence regarding freedom to operate, chain of title, and other IP concerns. These can become irreparable later on."
Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.
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