A Study Of Out-in M&As In China By MNCs And Government Regulations

With the strategic adjustment of the Chinese economy and the deepening reform of its state-owned enterprises,there appears an impetus for multinational corporations (MNCs) merging and acquiring China's enterprises,which takes a new trend and manifests some characteristics.The financial crisis brought about by the Subprime crisis resulted in withering demand which also hit China severely. What on earth are the effects of MNCs'mergers and acquisitions (M&As) in China? What is the relationship between out-in M&As in China and government regulations? How should the Chinese government regulate properly M&As by MNCs? A systematic investigation of the relationship between out-in M&As in China and government regulation has theoretical significance in properly regulating MNCs M&As in China and strengthening China's economic security especially at the time when the transition period for China's entry into WTO was over yet it faces a new global financial crisis. Also it has practical significance in implementing the spirits of the 17th National Conference of the Chinese Communist Party, realizing a mutual winning open strategy and effectively preventing financial crisis.Methods such as prescriptive analysis and empirical analysis,comparative study, case study, etc. are used in this study to theoretically and empirically analyze the problems involved of MNCs'M&As in China and the corresponding government regulations.Learning from the international experience, a general framework and policy suggestions are put forward in reference to how the Chinese government should regulate MNCs'M&As in China.Theoretically, this study enriches the theories in cross-border M&As and government regulations.From the perspectives of FDI and M&A, this study analyzed the motives of cross-border M&A,with the former adding the new reverse technological spillover motive as well as the six traditional FDI theories, while the latter adding industrial organization and speed of economic motivation theory; this study also put forward the new concept of "two swords" of cross-border M&A on the host country, discussing in great detail the effect theory of cross-border M&A from the economic and environment aspects and from the three levels of macro, industrial and microeconomics.Based on the theoretical research in public interest, public options, contractual regulations, interest groups,incentive regulations, etc.,following the recent development in the economics of regulation (such as the theory of public implementation of regulations),this study tries to find out the proper regulation theory for MNCs'M&A in China from the perspectives of economic regulation and social regulation.Empirically, this study focused on MNCs' M&A in China, the current corresponding regulations and the relationship between them.This study analyzed the "two swords effect" of cross-border M&A on China's macroeconomic aspects such as market structure, capital formation, employment, export competitiveness, etc. It also investigated the microeconomic aspects such as technological spillover, technological transfer, self-owned brand, assets price, corporate governance structure as well as the industrial economic effect, which help establish the foundation of economic regulation. Based on the requirement of sustainable development and low carbon dioxide economy, this study focused on the environmental effect, which established the foundation of environmental regulations for cross-border M&As.This study listed the typical cases of cross-border M&As in recent years in the major industries, highlighted the new trend in their scale, source, major participants, location, means and change of industry, etc. trying to find the rational for regulating cross-border M&As.After reviewing China's industrial policies,competitive policies, foreign investment policies and censoring policies, this study analyzed the major problems involved and particularly, by using econometric models,this study empirically analyzed the relationship between economic regulations, social regulations and cross-border M&As.The empirical evidence indicates that government regulations have significant effects on cross-border M&As,but the extent and size may vary. Specifically, there exists significant effect between economic regulations and cross-border M&As, while the social regulations, especially environmental regulations, do not have a significant impact on cross-border M&As, which shows that strengthening environmental regulations will not have a substantial inhibition effect on cross-border M&As.Based on theoretical and empirical research results,learning from domestic and international cross-border M&A regulations and experiences,this study argued that in order to deal properly with the relationship between MNCs'M&As in China and the related government regulations, we can approach from the following four aspects: firstly, based on low-carbon economic background,the economic and environmental effects of MNCs'M&As in China, we should adjust the corresponding economic regulations and moderately strengthen the social regulations,especially the environmental regulations;secondly, we put forward the multiple overall objective as well as short term and long term objectives in regulating MNCs'M&As in China; thirdly, introducing cost-benefit analysis in regulation,we proposed a framework of optimizing regulation revenue for MNCs'M&As in China;lastly, we proposed policy recommendations on reform of MNCs'M&As in China's domestic and international coordination regulatory system.On the one hand, it should be based on domestic conditions and strive to improve industrial policies, foreign policies,competitive policies and censoring and coordination systems for out-in M&As,on the other hand, China should participate actively in and have a say about the international coordination in regulations for MNCs'M&As to safeguard national economy security fundamentally.