Developing a Successful Strategy for the Chinese Company Entering the US Market April 19, 2011

©2011 Foley & Lardner LLP

1EYE ON CHINA WORKSHOP SERIES

Entering the U.S. Market via Strategic Alliances, Joint Ventures,

Direct Investment, and Other Strategic Collaborations

经由战略性联合，合资，直接投资和其它战略性合作进入美国市场

James C. Chapman, PartnerFoley & Lardner LLP

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Introduction - Doing Business in the U.S 简介 - 在美国做生意 Legal Framework 法律框架 Trends 趋势

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Legal Framework法律框架

Business Entities –corporations, limited liability companies, partnerships 商业实体–社团，有限责任公司，合伙

Foreign Investment – 外国投资

– US economy open, no approval required for forming a company, profits and dividends can freely flow abroad (subject to US taxes), no restrictions on interest and royalty rates, financing arrangements are flexible

美国经济是开放型经济，成立公司不需要审批，利润和分红可以自由汇往国外（根据美国税法纳税），对利息和权利金率没有限制，融资构成也很自由

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Legal Framework (cont.)法律框架（续）

– Highly regulated sectors – domestic air transport, banking and broadcasting, national defense, insurance, shipping, mineral rights, energy & utilities - require licenses, citizenship etc. 高度管制领域–国内航空，银行和广告，国防，保险，航运，采矿权，能源利用，需要行政许可，国籍等

– Exxon-Florio Law Exxon-Florio – permits President of the US to block otherwise legal foreign acquisitions that would threaten national security 法案–授权美国总统其他对美国国防利益有损害的外国收购

– US Patriot Act – requires financial institutions to establish anti-money laundering programs美国爱国者法案–要求金融机构建立反洗钱程序

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Legal Framework (cont.)法律框架（续）

Intellectual Property 知识产权 Anti-Trust and Competition 反垄断和反竞争法

– law designed to provide consumers with the benefits of competition.

立法宗旨向消费者提供竞争利益– The law protects competition not competitors 此法保护市场竞争不是竞争者

Product Distribution 产品分销– Distributors, Resellers, Sales Representatives

分销商，零售商，销售代表– Franchising – system of marketing and distribution where

one person is given the opportunity to market and sells goods pursuant to an established system and practice in exchange for a fee特许 – 特许是一种市场和营销体系，即根据已确立的体系和做法交换一定费用后给予一个人市场和销售商品的机会

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Trends趋势

Joint ventures are challenging – “Tong chuang yi meng”合资公司面临挑战– “同床异梦”

Foreign Investment including by Chinese investors is growing rapidly. China’s investment in the US in 2010 of $1.39 billion, rose 81.4% from 2009 levels and is expected to grow 50% in 2011 (MOFCOM)

外国投资包括中国投资快速增长。中国在美国的投资 2010 年是 13.9 亿美元，比 2009 年增长 81.4% ，预计 2011 年将增长 50% （数据来源于商务部）

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Trends (cont.)趋势（续）

Strategic imperatives, large, recovering markets and strong balance sheets have resulted in a return to M&A as a primary corporate growth and market entry strategy. In the first 9 months of 2010, Chinese spent $2.81 billion on acquisitions in the US (Bloomberg). In the same year, Chinese companies purchased or announced the purchase of over 50 US companies (CNN Money)

战略性迫切需求，做大规模要求，恢复市场以及平衡资产负债表导致合并与收购作为主要的公司增长和市场进入战略的回归。 2010 年前 9 个月，中国在美国的收购达到 28.1 亿美元（来源于彭博社）。同年，中国公司收购或宣布收购美国公司超过 50 起（来源 CNN 财经）

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Strategic Alliances战略联盟

Definition – a cooperative effort whereby each party is involved in the development and sale of a product or service under its own name and logo. There is no co-ownership or separate legal entity formed.定义–协作努力每一方以自己的名义和标识参与到产品或服务的开发和销售。

When are these useful? 什么时候采用战略联盟？

– One time opportunities 一次性机会– “Dating” – companies desire a business relationship but do

not want to make a serious commitment “ 约会”–公司期望商业伙伴关系但是不想做出庄重承诺

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Strategic Alliances (cont.)战略联盟（续） Examples 例子–

– Joint marketing effort where two companies come together to market a solution which includes the products of both parties

合作开发市场两个公司聚在一起构成对双方产品的市场解决方案

– Joint bid for a project – technology development and integration

对项目联合竞标 - 技术开发和融合

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Strategic Alliances (cont.)战略联盟（续） Issues 问题–

– Objectives 目标– Duties of the parties 各方义务– Compensation 赔偿– Financial commitment 资金承诺– Post-termination competition 后合作的竞

争

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Joint Ventures合资

Definition An arrangement involving two or more companies or individuals in a partnership for a particular purpose. Each contributing member provides capital, expertise, technology, or other special resources to the venture. 定义–出于特定目的包括两个或以上的公司或个人参与合作伙伴中的一种安排。每一个出资方向合资企业提供资金，专长，技术或其它特殊的资源。

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Joint Ventures (cont.)合资（续）

Difference between JV’s and Strategic Alliances? 合资与战略联盟的不同之处？

– JV’s tend require a greater financial and other commitment

合资倾向要求更严的资金和其它承诺– A new entity is formed 新实体成立– Tend to be longer term 存续时间更长

When are these useful? 什么时候采用合资？

– Larger market opportunities as opposed to a single project of bid

与一次性项目投标相反，有更大的市场机会– When each party possesses something the other party

needs creating synergy 每一方拥有另一方需要创造合资后协同效应的东西

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Joint Ventures (cont.)合资（续） Issues 问题–

– Objectives 目标– Duties of the parties 各方义务– Compensation 赔偿– Financial commitment 资金承诺– Competition during the life of the JV 合资存续期间的竞争– Dispute resolution 纠纷解决– Exit strategy 退出战略

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Strategic Investment战略性投资

Definition – Where one party seeks to obtain an equity interest in another in exchange for capital 定义 – 作为资本交换一方寻求获得另一方的资产利益

When is this useful? 什么时候采用战略性投资？– When the deployment of capital creates the opportunity

for financial return 当部署资本产生资金回报的机会– When the investor see an opportunity but does not have

the desire or commitment to acquire the entire company当投资者看到投资机会但是不希望或承诺收购整个公司

– When combined with cooperation on R&D, product distribution or similar objectives在研发，产品销售或类似目标有合作的机会

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Strategic Investment (cont.)战略性投资（续）

Process 过程– Identify objectives 确定目标– Identify the type of investment desired 确定期望投资的类型– Establish investment criteria – team, traction, technology,

market opportunity 建立投资标准 -团队，牵引，技术，市场机会– Establish a means to attract deal flow 建立吸引交易流动的方法– Valuation methodology 评估方法– Establish size of initial investment and follow-on 确定最初投资和后续投资的规模– Establish the investment process – including deal flow, due

diligence, legal, tax, accounting, monitoring and assistance 确立投资程序—包括交易流动，竞职调查，法律，税收，会计，监事，和助理

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Mergers and Acquisitions

合并与收购 Most common way for foreign companies to

enter the US market 外国公司进入美国市场最常用的方法 When is this useful? 什么时候采用合并与收购？

– Buyer wants to enter the market quickly 收购方希望快速进入市场– Buyer wants have a “head start” 收购方希望有“从头开始”– Buyer wants to acquire something it does not

have such as new products or distribution channels

收购方希望希望获得他没有的东西诸如新产品或分销渠道

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Mergers and Acquisitions (cont.)合并与收购（续）

Process 过程– Identify objectives 确定目标– Identify the type of target company desired 确定期望的目标公司的类型– Establish purchase criteria – industry sector, size,

customer quality, management quality 建立收购标准—产业领域，规模，消费者品质，管理质量– Establish a means to attract acquisition

opportunities – market research, engage an investment banker

确定吸引收购机会的方法—市场研究，与投行联系– Valuation methodology 评估方法

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Mergers and Acquisitions (cont.)合并与收购（续）

– Establish the acquisition process – including due diligence, legal, tax, accounting, monitoring and assistance

建立收购程序 -包括尽职调查，法律，税收，会计，监事，和助理

– Establish an integration plan – products/services, sales forces, IT systems, accounting and finance and culture

确定综合性计划—产品 /服务，销售力， IT 系统，会计和金融以及文化