The Analysis On China's Industry And Countermeasures Of FDI M&A

Under the new situation of economic globalization and China's entry into WTO, cross-border M&A (Merger and Acquisition) has emerged as the main approach of Foreign Direct Investment (FDI), which is the new trend in the flow of foreign capitals during recent years. To China's corporation, Foreign capitals'M&A is both an opportunity and a challenge. On one hand, it can bring us a lot of capitals, advanced technology and administrational experience, and the industry structural regulation, upgrade and technology development and so on also benefit from it. On the other hand, a series of problems man arise from M&A,like loss of state assets and industry monopoly, which will threaten national security and have negative effects on economical development.In this paper, a standard analysis together with a case analysis of corporations'M&A was conducted, and the underlying reason and motives of M&A were thoroughly analyzed from different perspectives by applying the western M&A theories.An intensive research on the background, motivation, current situation, manner, characteristics and development trend of the Foreign Capitals'M&A is also carried out in this paper. The findings of the research indicate that domestic corporations merged by foreign capital have the following characteristics: high speed, large scale, broad domain, diversified purpose. With the reference to the results of past researches and the demonstration cases, the modes of foreign capitals'M&A can be classified into several categories. Meanwhile, the research finding also suggests that the Foreign Capitals'M&A possesses the capacity to achieve some positive macro-effects and negative effects.In the end, based on the problems associated with M&A, which were identified by the analysis in the proceeding sections, the countermeasures were then proposed accordingly. Firstly, China should adjust its way of incorporating FDI and realize a strategic shift; Secondly, foreign capital M&A should be handled rationally and the structure of economy and industry should be improved, so that the negative effects could be minimized; Thirdly, China should encourage Foreign Capitals'M&A through institutional innovation, amend the relevant regulations and laws, give priority to the formulation of unified, transparent and fair laws for M&A. Lastly, in order to attain a stable, fast and sound development of Chinese economy, China should ameliorate the market environment and service system, and encourage M&A actively.