Chinese Salt Industry Mergers And Acquisitions Research

The Chinese salt industry is a traditional manufacturing industry. Compared with that in developed countries, there exists quite a large gap due to the management under the centrally-planned economic system.The characteristics of foreign advanced salt industry are: highly centralized enterprises, strong competitiveness, integrated production and sales, high efficiency, advanced facilities, high rate of resource utilization, rational product structure, wide range of product development and rational economy of organization for division of regions and logistics. The comparatively backward salt industry in China is embodied in scattered enterprises, small scale, weak competitiveness, unreasonable industrial and product structure, waste of resources, heavy pollution of environment, separation of production and sales, low efficiency, lower fund accumulation and backward facilities.Along with the speeding pace of market economy, the Chinese salt industry has ever encountered the unprecedented impact. The unbalanced development within the industry has made the mergence and integration of enterprises rolling on with full force.. With the strong enterprises merging and acquiring the weak enterprises and other industrial enterprises merging salt enterprises in full swing, the entire salt industry has entered into an era of integration and reconsolidation on a large scale. Faced with this trend, the State Development Commission has put forward its basic considerations on the readjustment of the structure of the Chinese salt industry as follows:Bringing the regional advantages into full play and planning the industrial lay-out in a rational way and encouraging the establishment of alliance between the salt enterprises and the alkaline enterprises and mergence and reformation of medium and small salt-making plants (salt fields) by large salt-making enterprises. In so doing, a certain number of large salt groups with core competitveness will be formed. And based on these groups, the stable edible salt supply system will be established. By way of technical renovation and structural optimization and taking salt end products as the goal, the industrial chain is elongated. The total efficiency of the salt industry will be raised in light of the readjiustment of product structure and the development of high value-added products.Based on the actual situation of the Chinese salt industry, the strategic considerations and the tendency for mergence in the Chinese salt industry cover mainly the mergence in the same industry----the advantageous enterprises will rev up capital expansion. The downstream chemical enterprises merge salt enterprises, forming an integrated body of industrial chain. Salt companies merge salt-making enterprises, forming an integrated body of production and sales. Salt enterprises acquire chemical enterprises, expanding the industrial chain into the downstream industry.China National Salt Group (CNSG) and Jiuda Salt Group (JSG) are the two major enterprises with the strongest momentum of expansion in the Chinese salt industry. JSG is now a private-owned share-holding enterprise which was transformed from the state-owned enterprise while CNSG is a central-levelled enterprise.CNSG has conducted the asset reconsolidation which is characteristic of asset transfers among several local state-owned salt-making enterprises and salt sales companies by means of its advantages of central-levelled enterprise and the formerly concurrent administrator in salt industry. By doing so, CNSG has become the largest salt company in China.Based on its advanced system, management and technology, JSG has conducted the acquisition of several salt-making enterprises in and out of Sichuan province, which is characteristic of asset acquisition. The integration after the acquisition has resulted in excellent effects of resource integration, raised the labor productivity and the rate of utilization of resources. JSG has become the largest and most efficient enterprise in the Chinese well and rock salt industry.The models of acquisition done by CNSG and JSG are different in some respect. The major common points, however, are based on its own strategy for development. The promotion of fast scale expansion results from strategic mergence and acquisition. Such a method of strategic mergence and acquisition is a major way to integrate salt industry and readjust the structure.In accordance with the related theory of mergence and acquisition, this paper studies the mergence and acquisition in salt industry, summerizes the strategic considerations for mergence and acquisition and puts forward that the strategic mergence and acquisition in salt industry is the only way to raise the efficiency, improve the industrial structure and realize the integration in salt industry. Also this paper points out the major problems which need to be solved occurred during mergence and acquisition in salt industry. The analyses and study in this paper will further improve the considerations for mergence and acquisition in salt industry and serve as reference for smooth realization of restructuring and integration of the salt industry.