Analysis On The Motivation And Strategy Of Privatization Of Chinese Listed Companies In US Stock Market

Listing is the dream of many enterprises,but because of the high threshold and long waiting time for listing on the capital market in China,many enterprises choose to be listed on the mature American capital market.From the beginning of 1990 s,Chinese companies have raised the wave of listing on the American capital market for four times,which led to the phenomenon of 64 Chinese companies listing in the United States in a year.However,since 2010,the stocks listed in the United States have begun to withdraw from the US capital market through privatization,thus setting off a wave of delisting,and continues so far.Privatization is a special kind of merger and acquisition in the capital market.In the face of the strict supervision system of the US capital market and the difference between the two countries,the listed companies must clarify the motivations of privatization,then correctly develop the strategy of privatization,the correct formulation of privatization strategy,in order to successfully complete the privatization,and develop in a healthy direction after delisting.This paper takes the process of privatization of Dangdang as an example to study the motivation and strategy of privatization of listed stocks in the United states.As one of the earliest B2 C shopping website in China,Dangdang was founded in 1999,and after years of development,it became the largest Chinese online bookstore in the world.In 2010,Dangdang was listed on the NYSE,as the first B2 C online shopping mall that was fully based on online business and listed in the United States.But 6 years later,in September 2016,Dangdang is delisted from the NYES and became a private company.For this reason,this paper takes Dangdang as a typical case of privatization.Through understanding the industry condition,operating performance and development strategy of Dangdang,combining with the whole process of Dangdang's privatization,this paper would research both internal and external motivation of Dangdang's privatization,and then analyse the strategy of Dangdang's delisting.Based on above,the conclusions and inspirations would be drawn to provide reference for Chinese enterprises which are preparing to enter or withdraw from the American capital market.This paper uses the method of combining theory research and the case analysis,takes the case of Dangdang's privatization as the center,and then launches from five parts to carry on the discussion.The first part firstly introduces the research background and significance,research ideas and methods,then summarizes and evaluates the existing research results.The second part is an overview of the theory of privatization of Chinese companies listed in American capital market.This part firstly introduces the basic viewpoint of value revaluation theory,centralized control theory,agency cost theory and wealth transfer theory.Then expounds the concept,motivation and strategy of the privatization of listed companies.Finally,the main features and the development status of privatization of Chinese listed companies in American capital market are introduced in this part.All above lay a theoretical foundation for the case analysis of Dangdang.The third part is the case brief of Dangdang's privatization.This part mainly introduces the ownership structure,development strategy and operating condition of Dangdang,and also describe the specific course of its privatization in detail.The fourth part is the case analysis of Dangdang's privatization.Based on the third part,this part analyzes the motivation of Dangdang's privatization from two aspects of external and internal.From the external environment,The company's market capitalisation is undervalued,Chinese companies suffered a serious crisis of confidence in the United States,Dangdang cannot achieve the purpose of financing in the American market,Chinese policies is encouraging stocks return and other factors together to promote Dangdang out of the US capital Market.From the internal strategy,strengthening the equity to prevent hostile takeover reducing maintenance costs caused by market supervision,getting rid of the shackles to achieve strategic adjustment and integrating resources to implement a strategy of "listing-delisting-listing" is the ultimate purpose of Dangdang's privatization.In addition,according to the process of Dangdang's privatization,this part evaluates the strategies implemented though the process of privatization,and draws the conclusion that bold implementation of one-step acquisition,carefully determining the repurchase price,the appropriate choice of repurchase financing channels,persevering in the struggle against competitors are the keys to the success of Dangdang's privatization.The fifth part concludes according to the results of the case analysis: first,undervalued market capitalization is the main reason for Dangdang's privatization;second,Dangdang's privatization is selected based on the costs and benefits;third,the correct choice of privatization strategy is the key to the success of Dangdang's privatization;fourth,the root of Chinese companies' trust crisis is its own defects.Finally,based on the conclusion of the case study,this paper puts forward suggestions: first,Chinese enterprises should correctly measure the costs and benefits of overseas listing;second,Chinese companies should strengthen their own construction to cope with the impact of market;third,the listed companies should make an appropriate plan before delisting;fourth,the listed companies should protect the interests of minority investors in the process of privatization.