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Hastings Business Law Journal

Authors

Amrietha Nellan

Abstract

Chinese businesses are wary of merging or acquiring United States companies due to a perceived hostile environment. The Committee on Foreign Investment in the United States (“CFIUS”) may deny the transaction or make recommendations to the President to divest a completed deal if a risk is found. After a string of highly public failed CFIUS reviews against Chinese acquirers, the process seemed insurmountable for Chinese investors.The recent success of a Chinese aviation firm, AVIC International, in acquiring a U.S. based aviation companyindicates that the United States is not an impenetrablemarket for Chinese investors. In particular, AVIC International’s use of the informal pre-notice review and mitigation agreement with CFIUS minimized political interference during the formal review and helped ensure a favorable outcome. This note suggests that Chinese investors should follow AVIC International’s strategy rather than shy away from acquiring U.S. companies.

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