Opportunities And Challenges For China Dairy Industry Offshore M&A

After China's entering into WTO,with the increasing number of bilateral investment activities which are the driving force for domestic industries cross-border expansion and M&A development.Offshore investment is important for the development of Chinese enterprises to improve its development quality and management level.With the upgrading of Chinese enterprises overall strength,according to enterprises own development demand,cross-border M&A activities have been developed quickly and high-quality cross-border acquisitions have gradually increased.Nowadays,Chinese enterprises have more power in the offshore M&A field,which can promote and encourage the rapid development of domestic enterprises to achieve overseas expansion.More and more enterprises rely on their own type of development in the country,which can't meet the enterprises' current and future strategic planning and goals,they need outside markets' development and driving force to realize them.Since 2000,the ratio of China cross-border M&A to global FDI(foreign direct investment)is increasing,but the time for China dairy enterprises going offshore investment was only after 2008,which happened melamine incident,a heavy hit for China dairy industry.This incident let China dairy enterprises thought about the future to continue and expand their production scale in China or go offshore to build plants producing finished products and shipping back to China to sell.With strong support by Chinese government to encourage enterprises to go outside,many dairy enterprises went to their target countries to go field investigation,considering from political environment,business environment,finance,tax,legal risk,human integration and others to consider deeply,especially from cost accounting aspect to consider,resulting in more China dairy enterprises to go offshore to invest.Through literature and case analysis,combined with economic theory using in dairy industry,this essay analyzes under big macroeconomic conditions,the external pressure for dairy enterprises facing,demonstrates the emergency situation for China dairy enterprises to go offshore investment,using outside resources to serve for Chinese market with strong support by China macro-policy support.These also explain offshore investment necessity.This essay analyzes problems and challenges dairy enterprises may encounter when investing offshore,proposes related solutions and provides theoretical support for dairy enterprises as their reference.This essay uses theoretical and practical way to illustrate opportunities and challenges encountered when dairy enterprises go offshore.Meanwhile,using Yili Group offshore investment case elaborates methods and solutions,those can be recommended to others.With dairy enterprises go outside,combined with two-child policy can make good contribution towards China dairy industry future development.