- M & A Behavior Strategy. Multinational Companies' Shares Move With Industry Monopoly Effect

Since 1990s, along with the openness of Chinese economy and the encouragement to FDI, more and more foreign investment flows into China, of which the joint venture and M&A investment is one of the important parts. Especially after entering 21^st Century, the M&A of MNCs in China is becoming much fiercer.While examine these cases of local firms joint ventured with MNCs carefully, there are still some idiographic characters worth of thinking. "Exchange technologies with market" has always been an important motivation of our local firms to hunting for cooperation with MNCs. While considering about the effect of these cases of joint venture or M&A, we will see that although some local firms have upgrade their technology and performance, there are still plenty of firms didn't make any achievement in promoting their performance after joint ventured with or merged by MNCs. Even worse, lots of joint venture firms have sunk into morass and finally merged by MNCs with a very low price. "Joint venture-Performance Deterioration-Merge" has seemed to become a "Curse of the Devil" imposed upon our local firms. Followed by these behaviors, an important result is that many industries in China has been monopolized and controlled by large MNCs.According to traditional theories of M&A, striving for synergy effects and promoting the performance or value of the merged firms is a key motivation of M&A carried out by MNCs. But the performance deterioration of so many joint ventured and merged firms cannot be explained just by the improper operation or the absence of synergy effects. Further more, we have also found that many MNCs tended to take "Uncooperative" action in the joint venture firms in order to lower the performance and value of these firms. Since these are behaviors contrary to the theories, the intention of MNCs behind these behaviors should be concerned by our research.In our opinion, the reason why the local firms would sink into morass after joint ventured with MNCs, and the MNCs tended to take uncooperative behaviors in the merged firms is that the ultimate goal of MNCs' M&A is to eliminate the competitors and monopoly or control the whole local market in order to achieve much higher profit. Driven by this motivation, the MNCs would be encouraged to take all kinds of uncooperative actions after merging the local firms to bring about the "antisynergy" effect, through which to suppress the local competitors' production and expand their own market power. Simultaneously, when the joint ventures' value was shrinking due to their deteriorative performance, the MNCs could acquire the remaining equity of the joint ventures with a lower price so that they can monopoly the local market with a minimized cost. The inevitable result of this strategy is the decline of merged firms' performance and the enhancement of industries' monopoly degree.Based upon the monopoly motivation of MNCs, this dissertation reveals the "antisynergy" effect chased by MNCs after merging or acquiring the local firms and analyzes the role of "Share-Acquisition" strategy in lowering the cost of MNCs to monopoly the market. By this analysis, we provide a theoretical explanation about why some local joint ventures' performance dropped after merged with MNCs. All these opinions will help us to recognize the effect of "Exchange technologies with market" strategy and make us keep a circumspect attitude in using FDI.On the base of the theoretical analysis, we also makes some systematical examination about the effect of local firms' performance and the monopoly degree of the market and enumerates some typical case of MNCs merging and acquiring local firms, through which we get some lessons that are benefit for local firms to choose a rational developing strategy and make good use of the foreign investment.This dissertation includes 7 chapters. Chapter 1 is the Introduce which shows the background and the framework of the research. Chapter 2 is a literature review which summarizes the theoretical and empirical studies about FDI and M&A. Chapter 3 is the theoretical analysis, which provides a game model describing the competition of MNC and local firms and reveals the optimal strategy choice of the MNCs. Chapter 4 and Chapter 5 are empirical discussion, which examines the performance of local firms after joint venture with by MNCs and the monopoly effects of MNCs' M&A in China. Based on these discussions, we give some juristical and political advices in Chapter 6; and the Chapter 7 summarizes the key conclusion of this dissertation.