There has been a lot of publicity about investments being funded out of China (in 2015, they totaled $118 billion dollars). But of equal interest is the opportunity for making acquisitions within China. Foreign investment into China in 2015 totaled $126.3 billion dollars. Not shabby.

First, let’s talk about the Chinese economy. Obviously the GDP growth rate has fallen, but even last year (2015) it was a more-than-robust 6.9%. The ongoing planning goal for the near term is estimated to be 6%, and bear in mind that this rate is now being applied to a more robust base (it is easy to have double digit GDP growth if your base is small).

There are numerous regulatory steps in order to make an inbound acquisition. You need anti-trust clearance, government approval for any foreign investment (it is wide open for biotech and completely shut for investments in internet media). There is a national security review not unlike that in the United States. As the RMB is not readily exchangeable, you need foreign exchange approval. Payment for the deal is tightly regulated (typically all deal consideration must be paid in full within three months; with special permission, you can stretch that to a year provided half is paid within six months).

There is sometimes a squabble as to the controlling language of the agreement (is it English or is it Chinese). But more importantly, there is discussion concerning governing law and venue of dispute resolution. In an acquisition, Chinese law must control. But for dispute resolution, you can negotiate for the utilization of Chinese courts, or arbitration in China, or arbitration in several identified international venues (Hong Kong, Singapore, Stockholm or London). According to my recent meeting with one of the three largest law firms in China (the firm has a startling 1,200 lawyer staff), commercial disputes generally are given fair hearing in Chinese courts (at least in the larger cities where local bias is less likely, and commercial sophistication higher).

Doing a deal in China is like doing a deal anywhere: you to pay attention to tax planning, tax rate (the corporate rate in the PRC is 25% and there is no “state” tax), and there is the usual dispute as to whether an acquisition is for equity or for assets.

These kinds of issues are important and require attention but, given the volume of money going into China, ultimately they will not constitute an absolute block (unless you are seeking an acquisition in a sensitive or totally prohibited space).