The Risk Management Of Overseas M&A In China’s Automobile Manufacturing Enterprises

The automobile manufacturing industry represents the level of performance of the industry in a country. After the reform and opening up, China’s modern automobile manufacturing began to flourish again. So far, China already has have many of their own brands, such as Geely, Chery, BYD, Xiali. China is a big automobile manufacturing country, but an automobile manufacturing powerhouse. Therefore, China’s automobile manufacturing enterprises still need to improve in the brand and its own technically. In recent years, China’s auto companies in several overseas acquisitions, especially Geely acquisition of Volvo, seems to make people see the direction of China’s automobile manufacturing industry. It can be predicted in the future that there will be more and more of our automobile manufacturing enterprises select overseas mergers and acquisitions to enhance their brand value and technology. However, the challenge is always accompanied by opportunity. There are many cases of failure in overseas M&A in the automobile manufacturing enterprises of China. These cases remind our enterprise:risk may arise in the merger. China’s automobile manufacturing industry must do much scientific management and to take the necessary measures to ensure the smooth progress of the M&A. And to makes the last to be able to achieve the purpose of mergers and acquisitions.Based on this, for the risk management of overseas M&A in China’s automobile manufacturing enterprises have certain theoretical significance and practical value. Firstly, add to the theory of cross-border M&A risk of automobile manufacturing. Although the risk of overseas M&A theory has been a lot of research, not many studies on automobile manufacturing. This paper, add to the theory of the risk of overseas M&A of the automobile manufacturing industry. Secondly, there is the operability of the proposed method. In this paper, using HHM model to identify the risk of overseas M&A of China’s automobile manufacturing. And by using the risk matrix, evaluate the various risks in details. Quantitative methods have been used in this article, so that there is a certain degree of operability. Thirdly, the paper provided policy recommendations to overseas M&A of China’s automobile manufacturing enterprises. By risk identification, risk evaluation, this paper presents some risk prevention measures. Enterprises can also use those as the basis to adopt appropriate measures to prevent risks. At the same time, this paper also proposed macro-policy recommendations for relevant departments.This article reads as follows:The first part is the basic concepts and theoretical basis. The second part is the analysis of the current situation of overseas M&A in automobile manufacturing industry. The third part is the recognition of risk of overseas M&A in China’s automobile manufacturing industry. The fourth part is the risk assessment of the overseas M&A of China’s automobile manufacturing enterprises. Finally, we conclude that the project risk level is high. The highest level of risks are that:the risk of the host country review, the risk of worker protection triggered, the risk of management after the merger, the risk of pre-merger management, the risk of financial. The fifth part is the preventive measures of risk of overseas M&A in China’s automobile manufacturing enterprises.The innovation of this paper is as follows:The first innovation is the research field. The risk of overseas M&A has been researched. However, do not have a lot of researches in the field of automobile manufacturing. The paper referenced to the previous study, and to continue research. The second innovation is the research methods. In the paper it applied HHM model to overseas M&A of the automobile manufacturing enterprises in China to identify risks. By doing this, it overcomes the past defects of single model. It used the thinking of diversification and quantitative. In the process of using the risk matrix, the paper made a deal with some of the details to make it more reasonable, referring to the previous literature.Of course, the paper also has a number of shortcomings:Although the usage of the HHM and risk matrix method makes risk assessment more objective, it does not completely eliminate the subjectivity of the risk identification and risk assessment. Due to the defects of Borda, it can not completely eliminate the risk tie, in the use of Borda. These questions need further study.