Studies On Government Regulation Of TNC's M&A In China

According to World Investment Report 2002, worldwide foreign direct investment in 2002 totals 735 billion US dollars, of which 80.8% is cross-border M&A, that is 594 billion US dollars. Thus cross-border M&A has replaced new establishment as the major mode of current FDI. The steady growth of China's economy, further improvement of market mechanism as well as entry into WTO all will undoubtedly lead to the tide of TNC's acquiring Chinese enterprises. Since China is a transition economy, it's of great significance to materialize industrial upgrading, to attract foreign capital, and to promote the development of domestic enterprises by means of cross-border M&A. However, without proper supervision, cross-border M&A may also bring some negative influences, of which the most serious is market monopoly and domination over core technologies by foreign capital, threatening industrial security and economic security. To ward off the negative effects of cross-border M&A and to discuss how to strengthen governmental supervision on cross-border M&A is just the starting point of this thesis. The author employs economic theories and government regulation theory to explore both positive and negative effects of cross-border M&A, and then introduces relevant experiences of government regulation of developed countries. And finally the article puts forward suggestions on how to regulate cross-border M&A. Specifically the whole thesis is consisted of five chapters:Chapter 1 explores the process and status quo of TNC's M&A in China. In the first place, the article introduces the three development stages of TNC's M&A in China, and then specifically analyzes the mode of TNC's M&A in China. Finally the thesis puts emphasis on discussing the latest trends of TNC's M&A in China, such as increasing corporate shares to obtain the decisive control over joint ventures, industrial upgrading from manufacture sector to services, acquiring listing companies and leading enterprises of any particular industry, enhancing the scale of investment and the degree of systematization.Chapter 2 dialectically discusses the negative and positive influences of TNC's M&A in China. On one hand, cross-border M&A helps to realize the multi-sourcing of investment in state-owned enterprises, improves the establishment of modern corporate structure, promotes technological advancement and industrial upgrading, cultivating management talents and perfects market competition mechanism. On the other hand, cross-border M&A may also lead to the loss of state-owned assets, monopoly of marketstructure, domination over core technologies by foreign capital, speculative M&A, increase in unemployment, international unbalance of payment.Chapter 3 probes into the necessity of adopting government regulation to eliminate negative effects of cross-border M&A. To start with, the article outlines the relevant theories of government regulation, and then puts emphasis on discussing the core issue -Anti-competition effect and monopoly in cross-border M&A. In details the article analyzes the welfare loss caused by monopoly from the point of regulation economics, and then respectively elaborates anti-competition according to the three types of cross-border M&A.Chapter 4 introduces the experiences of developed countries in implementing government regulation on cross-border M&A. First, the thesis dissertates the inspection laws, enforcement authorities, inspection procedures and particular industry constraints in the US and Germany. Second, the article briefly introduces relevant regulation measures adopted in EU and Japan.Chapter 5 puts forward suggestions on how to deal with cross-border M&A. The author dissertates his ideas from the following six aspects: consummating the government regulation law system of cross-border M&A, establishing standardized appraising system of corporate assets, implementing strategic alliances, fostering Chinese business group to participate in competition and cooperation with TNCs, Enhancing Chinese enterprises' ability to resist M&A, Enlarging the...