Development is a common phenomenon in many areas of human life, and it can carry lots of different meanings. On the one hand, it’s about more options, opportunities and certainties. On the other, development brings new challenges, and perhaps troubles. In this issue, we explore the implications behind some important market developments.
Midas magic looks at asset securitization, a strategy commonly used to transform illiquid assets into cash flow in hand. This seemingly complex financial finesse has grown increasingly appealing to Chinese companies, when economic slowdown has caused liquidity problems and market players may find it difficult to borrow from banks or raise money through traditional channels such as public offerings and bond issuances. Securitization has a lower financing cost than bank loans, and unlike bond offerings it puts more emphasis on the asset qualities rather than the creditworthiness of the companies.
The development of the securitization business brings new issues. Driven by market demand, more assets are used today for securitization purposes, but experts say this increasing variety means an overall growth in risk, and sometimes makes it hard to define the legal attributes of some assets. The current regulatory system may also not be effective enough for this new business practice.
Another overt development is a surge in Chinese cross-border deals, thanks to the easing of regulatory burdens, but these deals need to be properly guarded. Deal shield finds that international insurers are busy offering specialized merger and acquisition (M&A) insurance for Chinese cross-border deals, some contemplating expansion in Asia. The insurers’ portfolio also includes investment funds and corporations hunting for money in the region. Experts say M&A insurance is a useful shield against risk in unfamiliar markets.
As legal frameworks mature and business practice becomes more complex, it’s not surprising that your company may have to conduct internal investigations at some point. Under the microscope warns that almost every company in China may face the pressure of an internal investigation, which can be triggered by anything from an employee whistleblower to a customer complaint. And one wrong step in your attempts to uncover existing issues may cause new violations. The article helps you identify the common risks, and gives you practical tips about how to minimize them.
A significant development in cross-border trade conflict brings good news to Chinese exporters. Frayed trade analyzes the implications of the WTO’s report on a long-running trade dispute over EU’s fastener anti-dumping measures against China. In the report, China won all the claims and arguments. This victory influences not only the fastener industry, but the general trade practice of the EU, such as its analogue country method. The article explains how Chinese exporting producers can rely on the WTO’s legal reasoning and interpretation in this case to protect their rights in EU anti-dumping investigations.