The Current Situation Of Chinese Enterprises Overseas Mergers And Acquisitions, Characteristics, Motivation, And Risk Analysis

This paper, based on statistics of cases of cross-border mergers and acquisitions (M&As) and theoretical analysis, examines the status quo, the special characteristics, the motivation and risk analysis of the cross-border mergers and acquisitions done by Chinese enterprises, in the end looking forward to the future trend of them. The cross-border M&As of Chinese enterprises have been rising both in value and in numbers since the very first case. Because of China’s national conditions, many cross-border M&As have been targeted to the energy and natural resource industry, in accordance with the rapid economic development of China. While most of the cases are taken place in China’s backyard, Asia, Africa followed. Gaining natural resources is the most common reason of Chinese enterprises doing cross-border M&As, the other reasons are low labor cost, expanding globally, financial diversification, political mission and so on. However, a large portion of cross-border M&As has been ended with failure, for they have to face a lot of risks during and after the deals, such as lack of professionals, capital and core technology restrictions, policy and political risks. To effectively avoid these risks, the companies need to know both the opponents and themselves. Under the background of global financial crisis and the rapid economic development of China, this paper predicts based on facts that China is still going to increase the cross-border M&As whether in total value or in number and size of the acquired companies. Meanwhile, energy and natural resource would remain the key targets for Chinese enterprises, while high-tech and financial industry will become popular. In terms of the type of enterprises, more private enterprises in China would actively join the cross-border M&As.