A foreign acquisition in China runs a gauntlet of approvals that a greenfield setup never meets. Four of them decide whether a deal actually closes — and holds: merger control, national-security review, foreign-exchange registration, and data. Miss one and a signed deal can stall, or be unwound after completion. This is the checklist to run at the top of the process, not the end.
- Merger control (SAMR): notifiable if combined global turnover exceeds RMB 12 billion, or combined China turnover exceeds RMB 4 billion, and at least two parties each have China turnover above RMB 800 million (2024 thresholds). Below the threshold is not a free pass — SAMR can still call a deal in.
- National-security review: a genuine gate for sensitive sectors and control changes. A deal can be reviewed — and reversed — even after completion.
- Foreign exchange & share swaps: the money flow and any equity-for-equity structure carry their own approvals and SAFE registration.
- Data: the target's data — and the data room itself — pull the transaction into China's data regime.
- Map all four before signing, and sequence them. They run in an order, and getting it wrong costs months.
Foreign capital is increasingly entering China through the buy-side rather than greenfield builds — we covered why in Foreign capital is returning to China through a different door. But the buy-side playbook lives or dies on approvals. Here are the four to map first.
1. Merger control — the anti-monopoly filing
Under China's Anti-Monopoly Law, a concentration of undertakings that crosses the turnover thresholds must be notified to the State Administration for Market Regulation (SAMR) and cleared before closing. The thresholds were revised in 2024 — the first change since 2008 — and raised across the board.
As of 26 January 2024, a transaction is notifiable where:
- the parties' combined worldwide turnover in the previous financial year exceeded RMB 12 billion, or their combined turnover in China exceeded RMB 4 billion; and
- at least two of the parties each had turnover in China above RMB 800 million.
Two points foreign buyers underestimate. First, turnover is group-wide, not just the target's — a mid-size target can still trigger a filing because of the acquirer's global footprint. Second, falling below the thresholds is not a safe harbour: SAMR expressly retains the power to "call in" a transaction that raises competition concerns even where notification was not required. The higher 2024 thresholds were designed to let SAMR focus its resources on exactly those cases.
2. National-security review — the gate that can reverse a closed deal
Separate from merger control, China operates a foreign-investment security review. It screens foreign acquisitions that touch sensitive areas — defence and defence-adjacent assets, critical agriculture, energy and resources, critical infrastructure, critical information technology, key equipment manufacturing, and similar — particularly where the foreign investor takes actual control.
Treat this as a real gate, not a formality. In a case that drew wide attention in April 2026, China's national development authority intervened to unwind a cross-border technology acquisition that had already completed. The lesson for a foreign buyer is blunt: clearing the commercial and merger-control steps does not immunise a deal from security review, and the review can bite after signing and even after closing. Where a target sits anywhere near a sensitive sector, security-review exposure belongs in the term sheet, not the closing checklist.
3. Foreign exchange & share swaps — moving the money and the shares
Even a clean, non-sensitive deal has to move money across the border, and that carries its own layer. Cross-border consideration must be routed through China's foreign-exchange system, with the relevant SAFE (State Administration of Foreign Exchange) registration handled through banks. If the structure involves a foreign investor acquiring a Chinese company using its own equity as consideration — a cross-border share swap — additional approvals apply, and the mechanics are more involved than a straight cash purchase.
None of this is exotic, but it is sequencing-sensitive: the foreign-exchange and registration steps depend on the corporate and approval steps being done first and in the right order. Left to the end, they are where "closed" deals sit waiting for money that cannot yet legally move.
4. Data — the target's data, and the data room
If the target processes personal information or important data, the acquisition pulls the transaction into China's data regime on two fronts. The target's own cross-border data flows post-closing must fit a lawful transfer route; and the due-diligence data room itself can raise cross-border transfer questions if China-sourced data is exposed to an offshore buyer or its advisers.
We set out the mechanics separately — the three transfer routes in PIPL cross-border data transfer, and the city-wide relaxation in Shanghai's data export negative list. For M&A, the practical point is to scope data early: it shapes both how you run diligence and what the post-closing integration has to fix.
How the four fit together — sequence, don't stack
These are not four boxes to tick in parallel at the end. They interlock. Merger-control clearance is a condition to closing; security-review exposure can change whether you do the deal at all; the foreign-exchange and registration steps depend on the corporate approvals landing first; and data scoping shapes diligence from day one. The buyers who close cleanly are the ones who, before signing, ask of each gate: does it apply to this deal, what's the filing, and what has to happen before it?
Run that mapping at the term-sheet stage and the four filings become a schedule you manage. Discover them at closing and they become the reason a deal slips a quarter — or comes apart after it completes.
Frequently asked questions
Since 26 January 2024, a transaction is notifiable to SAMR if the parties' combined worldwide turnover exceeded RMB 12 billion, or their combined turnover in China exceeded RMB 4 billion, and at least two parties each had China turnover above RMB 800 million. These raised the thresholds that had applied since 2008.
Not automatically. Falling below the notification thresholds means no mandatory filing, but SAMR expressly keeps the power to call in a transaction that raises competition concerns. Below-threshold deals in sensitive or concentrated markets still warrant an assessment.
Yes. China's foreign-investment security review can examine deals touching sensitive sectors or involving a change of control, and a review can result in conditions or unwinding even after completion — as a high-profile 2026 case showed. Security-review exposure should be assessed before signing.
Using foreign equity as acquisition consideration triggers approvals beyond a cash deal, alongside the foreign-exchange registration that any cross-border payment requires. The structure is more involved and more sequencing-sensitive, so it should be planned early with the corporate and approval steps.
It can. The target's post-closing cross-border data flows must fit a lawful PIPL transfer route, and the diligence data room itself can raise cross-border transfer questions where China-sourced data reaches an offshore buyer. Scope data early in the deal.
Sources
- China Briefing — China's 2024 revision to merger filing thresholds (effective 26 January 2024).
- Skadden — China increases merger filing thresholds — independent confirmation of the RMB 12bn / 4bn / 800m thresholds and SAMR's call-in power.
- Internal: Foreign capital is returning to China through a different door; PIPL cross-border data transfer; Shanghai's data export negative list.
This article is general information for foreign companies, not legal advice on any specific matter. Rules and practice change; please take advice on your facts.