The Mergers And Acquisitions, Market Structure And Industrial Efficiency Of China’s Steel Industry

The steel industry is capital-intensive and resource-intensive industry。 Itsproduction technology characteristics determine that the economy of scale is the keyelement of the industry’s efficiency and competitiveness. So it has been a trend thatsteel enterprises pursue large-scale and large-scale through mergers and acquisitions.Since the beginning of the20th century, the steel industry has had four large-scaleinternational mergers and acquisitions. Through a series of mergers and acquisitionsrestructuring, the global steel industry’s degree of concentration has been continuingto rise. The market strength and competitive advantage of large enterprises have beenstrengthened significantly. The steel industry has entered into the era where thesuper-large enterprise groups dominate the development of the industry. Facing withthe speeding up of structural adjustment of the international steel industry, the lowmarket concentration, backward overcapacity, weak independent innovation ofChina’s steel industry constantly appear. In order to change this pattern, China’s steelindustry has formally entered a process of mergers and acquisitions since the late1990s, with the hope of the integration of effective resources, optimization of themarket structure, economies of scale and synergies through mergers and acquisitionsto increase productivity and promote technological innovations. With this background,this paper carried out a comprehensive explanation and empirical analysis of theevolution characteristics of the M&A conditions, changes in market structure,efficiency of resource allocation and level of technological progress of China’s steelindustry for recent years to study the structure of China’s steel industry mergers andacquisitions effects and industry performance, to find out the key contradictions, andto carry out the development countermeasures according to the major issues.On the basis of the summary of industrial organization, M&A and restructuring,and efficiency, this paper includes five study areas. First of all, on the basis of acomprehensive grasp of China’s steel industry M&A’s evolution characteristics andthe development environment at home and abroad, this paper analysis the problems inthe process of China’s steel industry’s M&A; Second, by using theories and methods of market structure, we measured China’s steel industry organizational structure andmarket concentration, compared the differences of domestic and foreign steel industrymarkets’ structure, and explain the effect of changes in the market structure of China‘s steel industry M&A from the points of the enterprise economies of scale,downstream industry chain’s market capacity, the barriers in and out of the industryand government behavior. Third, by using two-stage DEA approach, this paperanalyzed a causal relationship and the influence mechanism between M&A and theefficiency of resource allocation. The first stage measures the purely technicalefficiency and scale efficiency of China’s main steel listed companies from2005to2010by DEA method with relaxation variables, and compared change characteristicsof the company’s efficiency from three perspectives of year, region and size. Thesecond stage used Tobit regression analysis to examine the direction and intensity ofthe impact of various factors on the efficiency of the steel companies. Forth, thispaper explained the influence of the external technical environment and managementtools change on mergers and acquisitions activities, as well as the influence onmergers and acquisitions activity by enhancing the accumulation of internal corebusiness technology, breaking industry barriers to access to key technologies,promoting of technology diffusion and spillover and promoting business soft skillsupgrading. On this basis, in accordance with the overall, regional, classification, sizeand five typical enterprises, the paper carried out the evaluation of dynamic efficiencyof the technical progress index of listed China’s steel companies using of theMalmquist productivity index. Fifth, combined with the market structure of China’ssteel industry, industrial efficiency, technological advancement trend analysis andconclusions from the optimization of market entry and exit barriers, the paperpromoted technological progress suggestion to increase the concentration andefficiency of the steel industry. These suggestions include encouraging inter-regionaland overseas mergers and acquisitions, strengthening the survival of the fittestincentive and restraint mechanisms, multi-angle integration of mergers andacquisitions, weighting the relationship between the role of government and marketmechanisms, extending industrial chain and product chain and so on,This paper combined the technical and economic characteristics of the steel industry and stage of development with the world-wide steel industry M&A trend, M&A performance study was embedded into the framework of the SCP analysis. Last,the paper put forward the system innovation path of the steel industry developmentfrom the perspective of mergers and acquisitions.