China’s national security review process has historically been opaque. But a recent bid by Yonghui Superstore to take control of competitor Zhongbai Holdings has given much needed clarity on the timelines involved in such a review.
Despite receiving antitrust clearance on August, the Shanghai-listed supermarket chain operator also needed to secure national security approval. While the exact nature of the ongoing review is unknown, the fact that Yonghui’s largest shareholder is Hong Kong-incorporated Dairy Farm Company – itself a portfolio company of British conglomerate Jardine Matheson – possibly contributed to the surprise national security review.
Currently, three separate regulations govern national security reviews in China: a February 2011 State Council notice establishing the current system; Ministry of Commerce (MOFCOM) implementation rules issued in August 2011; and a State Council notice regarding free trade zones issued in April 2015.
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