Study On The Strategy Motivations And Economic Consequences Of Assets Stripping

With the society continuously progressing and the economy developing constantly,Chinese capital market,in correspondence,keeps alarming trends in its advancement and expansion.As an indispensable part to improve the capital market,the enterprises have to respond to the changes on the market accurately.There are all kinds of responses to a variety of situations in the external environment,and assets restructuring has been considered an effective strategic adjustment with priority by many companies.Asset restructuring can be divided into two categories: asset extension and asset shrink.Asset extension is more popular than asset shrink in the world,but the latter plays an indispensable role for the development of the companies.Enterprise takes contractionary asset restructuring mainly in the way of assets stripping,assets swapping,equity carve-outs,aiming at a more optimized configuration,capital appreciation,and loss reduction.Due to the importance of contractionary asset restructuring on the health of market and enterprise development,more and more enterprises pay attention to contractionary asset restructuring approach,and take them as a useful tool in bottoming themselves out of the current dilemmas,and thus creating a favorable condition for their further development in future.A variety of approaches are at his hand when a company wants to implement contractionary asset restructuring behavior.Here in my paper,asset stripping,the very typical way and widely-used widely approach by Chinese enterprises,is my research object,and I will analyze its motivation and consequences.In many cases,assets stripping does not necessarily mean the failure of business.To the contrary,it can be a business strategy: to extract itself from business areas with limited growth prospects and not favorable to the development of overall business;to put the limited resource in the most competitive areas to achieve the optimal allocation of resource;and to promote industrial upgrading and adjust the main business.After assets stripping,enterprises' business and management are more effective;the quality of current assets are enhanced by giving up the bad assets.This paper aims to discuss assets stripping theories,to analyze its motivations and economic consequences,and to provide some reference value and constructive advice through the thorough study of a case,the North Electro-Optic's Assets Stripping.The rest of this paper is divided into five sections: the first section is the overview of my paper.It describes research background and significance,research ideas and the research methods,thesis research framework and the review of the literature about assets stripping.The second section explains the related theories.The third section is to introduce the case of North Electro-Optic Co.Ltd.'s assets stripping.The forth section is to analyze the motivation and consequence of North Electro-Optic Co.Ltd.'s assets stripping.The last section are the conclusions for North Electro-Optic Co.Ltd.'s assets stripping.