CNOOC's promise of transparency, pledged to win approval fromCanada for its $15.1 billion purchase of Nexen Inc (NXY.TO), lookslike a positive step on the face of it but is unlikely to representa sea change in Chinese business practices, Reuters reported.
To be sure, the details of commitment are not clear. Thestate-controlled energy firm has promised the Canadian governmentan annual compliance report on all its commitments that are part ofits takeover of Nexen, China's biggest ever takeover. These includelisting shares on Toronto stock exchange, which comes with certaindisclosure requirements.
But when capital is king, cash-rich Chinese state-ownedenterprises have the balance of power in any acquisition talks,leaving doubts about the real potency of transparency pledges.
"On the transparency side, I believe there will be efforts fromforeign governments to get more information, but it's still aquestion of how far China is willing to give," said Robert Lewis, apartner at Zhong Lun law firm in Beijing. "Twenty years ago it wasall about foreign capital coming into China and that foreigncapital having the leverage in negotiations. Now it's the other wayround, so China will not have to give as much on the transparencyside as some might suspect".
The international community has demanded greater transparencyfrom China on a number of fronts for years, wary of its intentionsas the country grew to become the second-biggest economy in theworld and symbolic of a shift in global power to emergingnations.
On the latest front, U.S. securities regulators are in anintense stand-off with their Chinese counterparts over access toChinese audit documents. Separately, a U.S. congressional advisorypanel described Chinese investment in the United States as a"potential Trojan horse."
China's state-secrets laws, massive bureaucracy and cronyismmake it difficult to get key, verifiable information from Chinesecompanies.
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of The NASDAQ OMX Group, Inc.
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