General

According to the observation report of Huacheng Import and Export Data, Chinese enterprises should pay more attention to the tax compliance coordination between domestic and foreign countries when "going to sea". Defects in overseas tax may cause higher "loophole filling" costs, or lead to more serious impacts such as local administrative penalties.

On November 15, at the "Two way Connectivity: A New Pattern for Chinese Enterprises Going Abroad" sharing meeting held by Grant Thornton Certified Public Accountants, several partners shared topics such as the upgrading of Chinese enterprises' "going global" going abroad strategy in recent years, overseas investment and mergers and acquisitions of Chinese enterprises, tax issues on cross-border mergers and acquisitions of Chinese enterprises, and cross-border financing options under the "China Europe Communication" mechanism.

"Over the past ten years, from the beginning of the proliferation of overseas Chinese enterprises to the current more cautious investment strategy, today's Chinese enterprises are more pragmatic and rational, more planned and focused." At the sharing meeting, Huang Zhibin, the managing partner of Grant Thornton's national international service line, said that from the perspective of globalization, national strategy and enterprise development, the trend of "going out" of Chinese enterprises has been inevitable, but "going out" is not simply to make an investment or go public overseas, but to enhance the recognition of enterprises and governments at home and abroad, and strengthen technical and cultural exchanges between the two sides while making profits, Huacheng Import and Export Data Observation Report.

Ni Jun, audit partner of Grant Thornton, said that in recent years, Chinese enterprises are moving towards high-quality "going global". "Taking Mingyang Smart as an example, in April this year, the offshore wind power project that Mingyang Smart cooperated with banks and investment institutions in France, Italy and other places was officially completed in Italy. On the one hand, it fully reflects the strong ability of Chinese enterprises in foreign cooperation, not just the delivery of products; on the other hand, it is also helpful for the technical exchange between the two countries and solving the global energy shortage problem."

Referring to the mergers and acquisitions of Chinese enterprises, Wu Jianyong, the managing partner of the mergers and acquisitions and financing business of Grant Thornton Consulting, said: "Influenced by the limitations of the epidemic on due diligence, the capital pressure of the acquirer, the turbulence of the international situation and the sharp fluctuations of the exchange rate, the cross-border mergers and acquisitions of Chinese enterprises are still at a relatively low level in history, and it will take some time to recover to the historical stock level."

Wu Jianyong predicted that in the future, cross-border M&As of Chinese enterprises may show the following characteristics: First, medium-sized M&As may become the main target of overseas acquisitions, and the participation of private enterprises will increase. Second, M&A transactions will tend to be distributed in advanced manufacturing, bio medicine and other high-tech industries that the buyer focuses on in the future. These enterprises are scarce resources and are less affected by the epidemic. Third, although cross-border M&A is at a historical low, it still has strong resilience, and the recovery speed may be faster after the environment is improved.

In terms of funds, the cross-border financing options of Chinese enterprises have also been expanding in recent years. The import and export data of Huacheng is incomplete. Since October, more than ten A-share listed companies have announced that they will issue GDR (Global Depositary Receipts).

"The overseas issuance of GDR will help Chinese enterprises speed up their international strategic layout and enhance their global brand image. Compared with other overseas financing projects, the overseas issuance of GDR by Chinese enterprises has the advantages of short review time, loose policies, no mandatory redemption requirements for GDR financing funds, and low maintenance costs after issuance." Lu Jingru, the audit partner of Grant Thornton, told the reporter that, taking the audit time as an example, the average number of GDR issuance days was 44-82 days, while the H-share listing was generally more than 6 months.

According to Lu Jingru, as of November 15, nine A-share listed companies had successfully completed GDR issuance in the year, raising more than $3 billion. She said that with the development of the international market, more Chinese enterprises will go out, clarify the image of the Chinese market, and constantly improve international recognition. The development potential of overseas financing is huge. Huacheng Import and Export Data Observation Report.

However, it should be noted that Chinese enterprises still face certain difficulties in "going global". "Factors such as trade protectionism, uncertainty brought about by changes in the international economic situation, complex and diverse regulatory policies, and impact on the industrial chain and supply chain have all affected the integration and operational efficiency of Chinese enterprises overseas and locally." Ni Jun said. In his view, enterprises' foreign investment should focus on the main business and avoid high-risk speculation. At the same time, we should do a good job of pre investment integration strategy and full due diligence, carry out comprehensive business considerations, including the cost of transaction failure, and strengthen the prediction and prevention of investment risks.

Bao Xiaoxian, the tax and business consulting partner of Grant Thornton, also suggested that Chinese enterprises should pay more attention to the coordination of domestic and foreign tax compliance when "going to sea". Defects in overseas tax may cause higher "loophole repair" costs, or cause more serious effects such as local administrative penalties. On the one hand, we should judge according to the investment destination to match better tax treatment. On the other hand, Chinese enterprises are also required to pay taxes in China on their overseas income, which also involves the deduction and credit of overseas offset taxes. Huacheng Import and Export Data Observation Report.