The Financial Considerations Of Multinational Companies In Merging & Acquiring Mainland Enterprises

Globalization of economy leads to a series of keen competitions amongst multinational companies. To strengthen their competitiveness, most multinational companies adopt merging as a mean of expansion tactic. The open policy of the mainland creates a fertile market environment. Moreover, a steady growing economy together with a huge potential market in the mainland makes it probably an ideal market for the multinational companies. Nowadays, the industrial system of the mainland and its policy are more complete and open respectively that enables the multinational companies to strengthen their competitiveness through merging. Thus, they can achieve their final goal - expansion, and it is the most appropriate time and the best choice by merging the mainland enterprise. The mainland listed companies are the ideal targets for merging. Applying a suitable method of merging speeds up the processing time and lowers the cost. Before merging, the multinational companies have to manage their finance well. Adopting a tailor-made method of financing can minimize the merging cost and avoid causing risks. In the merging case of Nissan Motor Co., Ltd. (Nissan) with DongFeng Motor Corporation (Dongfeng), the Nissan's preparation work on finance is a good reference. The financial reasons causing the merging are to combine Nissan's existing business in the mainland and to expand its share in the mainland market, and to obtain the synergy rapidly. Before the merging, the thorough investigation and the win-win resolutions are a concrete example to learn how these can minimize the risk. Judging from Nissan's financing arrangements and the merging method, we can experience how an effective method minimizes the cost. After the merging, Nissan's financial control over the new company demonstrates how Nissan consolidates the finance affairs and to have a sound financial combination in the merging.