×
You will be redirected back to your article in seconds

China Makes It Official, Formalizes Overseas Acquisitions Restrictions

So now it’s official: The brakes are on when it comes to Chinese investment in film, entertainment, sports and hotels.

In documents and statements issued Friday by the National Development and Reform Commission and by the State Council (document in Chinese), the Chinese government explained its crackdown on overseas mergers and acquisitions. In the past, it has characterized some deals in the entertainment sector as “irrational.”

Sometimes known as the state planning body, the NRDC listed three categories of overseas investment: those that are banned (sex and gambling industries, and core military technology); those that are restricted; and those that are to be encouraged. Property, film, entertainment, sports, hotels and obsolete equipment were named in the “restricted” category. That means any proposed deal will have to endure new levels of scrutiny.

Companies including Dalian Wanda and Fosun International have been involved in all of those categories. Wanda recently suffered further problems when the government ordered banks to cease lending to many of its foreign operations. The giant group, which was China’s biggest investor in Hollywood, responded by selling off $9 billion of leisure and hotel assets in China.

Falling into the “encouraged” category are those deals that support the Belt and Road Initiative, China’s massive overseas infrastructure and network building plan. The outreach scheme is frequently likened to a new Silk Road. Other investments that are encouraged are those that promote Chinese technical standards.

“Profound changes are taking place in international and domestic situations, and Chinese enterprises face not just relatively good opportunities but also various risks and challenges in overseas investments,” said the State Council, the Chinese government’s Cabinet.

The movement against overseas dealing began last year with the incremental introduction of capital outflow restrictions and greater deal scrutiny. While high-priced individual deals may have caught the eye of regulators, the process was likely sparked by macroeconomic concerns over debt and currency and attempts to rein in volatility and markets.

“Some companies focused on property rather than the real economy, which, instead of boosting the domestic economy, triggered capital outflows and shook financial security,” the State Council said.

Deal flow this year across many sectors has reduced considerably. But recent data point to overseas deals by private companies falling even more sharply while deals by state-owned enterprises are accelerating.

More Biz

  • Apple Event: Everything We Learned From

    Everything We Learned From Today's Apple Event

    After revealing new services in news, finance, and gaming, Apple CEO Tim Cook kept the biggest, most anticipated announcement until last. Cook, along with heads of worldwide video programming Zack Van Amburg and Jamie Erlicht, and a whole group of Apple’s creative talents, presented the company’s new Apple TV+ streaming service, which is slated to [...]

  • Wynn Nightlife Announces Residency for Roving

    Wynn Las Vegas to Host Residency for Roving Spanish Party Elrow

    One of Las Vegas’ biggest music players is doubling down on the power of a global brand instead of just a single DJ to help them stay on top of Sin City’s increasingly competitive clubbing scene. Wynn Nightlife has announced a year-long residency and partnership with Spain’s Elrow, a respected Ibiza-born party that last year [...]

  • PledgeMusic Down to a ‘Skeleton Staff,’

    PledgeMusic Down to a ‘Skeleton Staff,’ Although a Potential Buyer Is in the Wings

    PledgeMusic, the direct-to-fan marketplace that has faced serious financial troubles in recent months, is down to a “skeleton staff” and payroll in the U.S. office ceased within the last month, sources close to the situation tell Variety, although a potential buyer is “very interested” in the company and has been in due diligence for several [...]

  • Michael Avenatti

    Michael Avenatti Arrested on Bank Fraud and Extortion Charges

    Attorney Michael Avenatti was arrested Monday and is facing federal charges on both coasts of bank fraud, misappropriating client funds, and trying to extort Nike. Prosecutors in the Southern District of New York allege that Avenatti tried to extract more than $20 million from Nike, and said that if the company did not pay him, [...]

  • Daily Show Viacom

    DirecTV, Viacom Avert Blackout After Marathon Negotiation

    DirecTV and Viacom have agreed on a carriage renewal pact covering a raft of Viacom’s cable channels after a marathon negotiation over the weekend. In a joint statement early Monday, the companies said: “We are pleased to announce a renewed Viacom-AT&T contract that includes continued carriage of Viacom services across multiple AT&T platforms and products. [...]

  • Discovery CEO David Zaslav Sees 2018

    Discovery CEO David Zaslav Sees 2018 Compensation Soar to $129.4 Million

    Discovery Inc. president-CEO David Zaslav is once again making headlines for an enormous compensation package. Zaslav’s 2018 compensation soared to $129.44 million in 2018, fueled by stock options and grants awarded as the longtime Discovery chief signed a new employment contract last July that takes him through 2023 at the cable programming group. Zaslav received [...]

  • Jonathan Lamy RIAA

    Jonathan Lamy Stepping Down From RIAA

    Jonathan Lamy, the Recording Industry Association of America’s longtime executive VP of communications and marketing, is stepping down from his post after 17 years, he announced today. As he put it in an email to Variety, “I started back in 2002, which means it’s been 17+ years, four different RIAA CEOs, three format changes and [...]

More From Our Brands

Access exclusive content