Research-based Theory Of Competitive Advantage Of Cross-border Mergers And Acquisitions Of Chinese Enterprises

After the entry of WTO, the cross-border merger and acquisition (M&A) of Chinese enterprise increases sharply all over the world and forms a tide. This has happened under the background —underdevelopment of domestic M&A and low level of internationalization. Most of the cross-border M&As' targets are firms of developed countries, such as America, Europe, Japan and Korea, and the purpose is mainly to gain technologies, brands or international channels. Great anxiety and criticisms arise towards the necessity and success possibility of Chinese enterprises' cross-border M&As.This essay points out with analysis that western theories of cross-border M&A can not explain cross-border M&A from developing countries, especially from China. So the essay tries to interpret the drives and necessity of Chinese enterprises' cross-border M&As. Moreover, it analyzes the possibility of competitive advantage enhancement through cross-border M&A and tries to offer cross-border M&A strategies and tactics.In the third part of this essay, the author holds that comparative advantage is the basic advantage of Chinese enterprises; however, comparative advantage is junior advantage and the worsening of international trade environment, appearance of comparative trap and the increase of domestic cost make comparative advantage unsustainable. This situation develops quickly after China's entry of WTO. So, Chinese enterprises have to promote the junior advantage to a senior one.In part four, the essay analyzes why Chinese enterprises choose the means of cross-border M&A to promote competitive advantage and why the promotion is possible. The author denies the western viewpoint that competitive advantage is the precondition and basis of cross-border M&A, and points out that there exist three promotion modes of competitive advantage. It is possible for a dominant enterprise to merge a weaker, but also possible for a weaker to merge a dominator, though the difficulty is quite different and there exist many factors to influence the promotion of...