The Research On The Motivation Of Chinese Corporate Cross-border Mergers And Acquisitions

With the further development of economic globalization, more and more Chinese enterprises realize internationalization by means of cross-border mergers and acquisitions. Cross-border M&A gradually become the major method of Chinese outward foreign direct investment. As an important impetus of economic globalization, Multinational companies also play the leading role on cross-border M&A. China is the largest developing country in the world and its total economic output has occupied third place worldwide. However, China has a small number of multinational companies, which sizes and strengths are far less than the multinational companies of developed countries and the overall level of cross-border M&A is relatively low. In 2008, the financial crisis caused by American subprime mortgage crisis was sweeping the globe, it brought many adverse effects to Chinese economy. Meanwhile, this crisis brought opportunities as well. China enjoys the world's first foreign exchange reserves and foreign assets become lower prices because of RMB appreciation. These create a good external environment for Chinese corporate cross-border M&A. Chinese enterprises by means of cross-border M&A can also relatively easily obtain overseas resources,technology,market and strategic assets, bridging the gap between the international leading enterprises and Chinese enterprises and improving the international competitiveness. This paper is aim to analyze the motivation of Chinese corporate cross-border M&A.First, this paper analyzes the status of Chinese enterprises cross-border M&A.Through collecting 95 cases of cross-border M&A for the period from 2001 to 2008, the author summarizes the the subject compositon, location, industries and sectors of cross-border M&A of Chinese enterprises.According to statistics, chart and figures, we realize that the state-owned enterprises are the main part. The area is mainly in the Asia, Europe and America. Secondary and tertiary industries is the focus industry of Chinese enterprises cross-border M&A.The motivations of Chinese enterprise Overseas M&A is the emphasis of this article. This paper divides the motivations into two levels called external and internal motivation. In the research on the external motivation, this paper attempts to use 1990-2008 relevant macro data, the amount of Chinese enterprises cross-border M&A to be dependent variable, per capita GDP,the amount of foreign exchange reserves and exports to be the independent variables, through the relevant granger causality test and multivariate linear regression method, author does empirical test on external drivers for Chinese corporate cross-border M&A. The results show that the per capita GDP,the foreign exchange reserves and export are promoting Chinese enterprise transnational M&A. Among these factors, the per capita GDP plays the most obvious role in Chinese enterprise Overseas M&A. In the meanwhile, the foreign exchange reserves and export are also playing a positive role. On the internal motivations of Chinese enterprise Overseas M&A, the author discuss the enterprises'behavior of acquiring resource,technology,market and strategic assets from the microcosmic perspective.Then it analyzes the typical case---The subsidiary of CNOOC takes over the Norway Awilco Offshore ASA company and reveals the reason that Chinese enterprise acquire the enterprises of developed countries ---the reverse investment behavior.Finally, based on the previous analysis, author gives some suggestion for Chinese enterprises cross-border M&A from the government and enterprise levels.