13 Nov 2014
Online CBA: What are the Procedures for the Acquisition of Chinese Beauty Salons by Foreign Companies?
Q: What are the Procedures for the Acquisition of Chinese Beauty Salons by Foreign Companies?
A: According to the Provisions on the Merger and Acquisition of Domestic Enterprises by Foreign Investors, there are two types of M&A of domestic enterprises by foreign investors:
1. Equity M&A
This refers to the purchase of the equities of the shareholders of a non-foreign-invested enterprise in China ("domestic company") or the subscription for capital increase of a domestic company, thereby converting the domestic company to a foreign-invested enterprise;
2. Asset M&A
This refers to the establishment of a foreign-invested enterprise by a foreign investor to purchase and operate the assets of a domestic enterprise by the agreement of that enterprise, or, the purchase of the assets of a domestic enterprise by a foreign investor which uses this asset investment to establish a foreign-invested enterprise and operate the assets.
The mergers and acquisitions of foreign companies in China will not be protected by law if they are not processed and approved in accordance with legally-prescribed procedures. Foreign companies are advised to seek the assistance of accounting or legal professionals in their mergers and acquisitions. Please read Mergers and acquisitions, China style for a better understanding of the details.
A public hygiene licence is required to operate beauty salons. Foreign companies must go to the competent departments to go through the necessary procedures after their M&A.
(The HKTDC provides one-on-one China Business Advisory Service free of charge to assist companies in resolving problems encountered when doing business in China. For enquiries and appointments, please call (852) 1830 668 or register online.)