Study Of Foreign Mergers And Acquisitions Of Domestic Enterprises In China

Under the new situation of economic globalization and China's entry in WTO, cross-border M&A (Merger and Acquisition) has emerged as the main approach of Foreign Direct Investment (FDI), which is the new trend in the flow of foreign capitals during recent years. However, M&A investment only accounts for a small proportion of China's total utilization of FDI, which is incongruous with the means of the international capitals' flow, and the Foreign Capitals' M&A of domestic companies is still in the process of institutional change. It is suggested that China should manage Foreign Capitals' M&A with rationality, while it adopts foreign capitals actively, reasonably, and effectively. Besides, to meet the tremendous challenges brought by the international companies' entry into Chinese market, Chinese enterprises must adapt to the new macro-environment, seek for a more reasonable development approach in the course of the institutional change, and try to create a win-win situation. Therefore, integrating Chinese economy with international economy by M&A and cooperation with the multinational companies would be an appropriate method.Chapter 1 defines foreign capitals' M&A and cross-border M&A. The types and methods of M&A, and some characteristics of the development of cross-border M&A are also explained in this chapter. The history and confronting problems of China's introduction of FDI and the incongruity between the introduction of FDI in China and the global FDI against the background of cross-border M&A are also included in this chapter. Chapter one also puts forward the strategy that the introduction of China's FDI should be stimulated by cross-border M&A.Chapter 2 analyzes the behavior that the foreign capitals merge the domestic enterprises. Chapter 2 also analyzes the backgrounds, motivations, the present conditions, methods, characteristics and the trends of the foreign capitals' mergering the domestic enterprises and points out the major problems of thisbehavior.Chapter 3 evaluates the impact of the Foreign Capitals' M&A on China's economy. In this chapter, it is suggested that the impact is the coexistence of positivity and negativity. Chapter 3 presents that the Foreign Capitals' M&A is good for pioneering new channels for the introduction of the foreign investment, furthering the reforms of the. state-owned enterprises, upgrading the structure of industries and perfecting the laws and regulations and boosting the transparency of the policies. On the other hand, the Foreign Capitals' M&A tends to form the monopoly of industries, incurs the losses of state assets and imbalance the structure of industries and the regional economy. To make matter worse, it also will disturb the steadiness of the national economy and the development of the society.In the end, based on the problems associated with M&A, which were identified by the analysis in the proceeding chapters, the countermeasures were then proposed accordingly. Firstly, China should adjust its way of incorporating FDI and realize a strategic shift. Secondly, foreign capital M&A should be handled rationally and the structure of economy and industry should be improved, so that the negative effects could be minimized. Thirdly, China should encourage Foreign Capitals' M&A through institutional innovation, amend the relevant regulations and laws, give priority to the formulation of unified, transparent and fair laws for M&A and anti-monopoly, and provide institutional protection for each kind of M&A. Lastly, in order to attain a stable, fast and sound development of Chinese economy, China should ameliorate the market environment and service system, and encourage M&A actively.