Postwar Japanese Enterprises' Cross-Border Mergers And Acquisitions Along With Its Enlightenment

With the rapid development of the world economic globalization, the cross-border mergers and acquisitions (below named as M&A) have been surging. Along with the rapid economic development,sharp increase of the foreign exchange reserve, Chinese enterprises are getting more competitive,more globalized, and their M&A are increasing greatly. However owing to the lack of theoretical guidance and paractical experience, most of them have failed. Present China has striking similarities to the ever Japan. To analyze the successes and failures of the Japan's enterprises'M&A is of great realistic importance to China.Within the developed countries, Japan's M&C is comparatively less developed due to its so many laws and administrative guidances restricting investment,the mutual-stockholding arrangement and lifelong-employ system. After the second world war, Japanese enterprises have been experiencing three tides of M&A.The first tide accured in the 1960s and 70s. After the war, to eliminate the power of Japan's tycoons, the allied forces pushed Japan amending the《commercial law》to limit the power of stockholders'general meetings and increase the position of board of directors. The stockholders have no hand in the company's daily operations. As the time rolled to 1960s and 70s, Japan returned to the world stage.With the process of more open policies in trade and capital liberalization, the desire to participate in the world competition pushed Japan's M&A. The second tide occurred in the middle 1980s until the upper 1990s. Since the middle 1980s, Japanese Yen was obliged appreciate sharply. At that time, Japan's foam economy was on the peak. The main purpose of most Japan's M&A was to gain benefit from the buying and selling games. However, in the 1990s, the main target changed to the companies'reorganization and self strenthening. The third tide began from 2002. In the early 1990s, the economic foam burst. Japan's M&A decreased because of the economic recession. Until the middle and late 1990s, with Japan's internal structural reform, restrictions in many fields were slackened by the government. In addition, Japanese economy took a favorable turn in 2002.Japan's enterprises eagered to create more business opportunities abroad. Japan's M&A had been increasing year by year since 2002 to 2006 either in amount or in quantity. However, in the latter half of 2007, worrying about the influence of the U.S.A's inferior-loan crisis, the total amount of Japan's M&A decreased. But when the global economic crisis broke out in 2008 and value of many stock companies was cut in half, Japan's hot money gushed abroad. Most of them are aging to keep control of the companies'operations and have strategic meanings.The intentions and reasons for Japan's enterprises'M&A include: 1. To achieve overseas high-quality,low-priced resources. Most of the natural resources of economic development are imported in Japan. So such kind of M&A lead to cut the productive costs. 2.To maintain products'market share. The increasing products exceed the capacity of Japan's domestic market, so the M&A is to open up the overseas market. 3. To avoid trade frictions. Since the late 1970s, large quantities of Japanese products in developed countries aroused sharp trade frictions. Japan gets around the western countries'import restrictions by M&A. 4. To make use of the overseas low-priced labor. Japan's domestic labor cost is always increasing, so the labor-concentrated industries such as textile,machinery turn to invest in adjacent developing countries. 5.For the appreciation of Japanese Yen.Japan had been the second largest country in economy through the 50-70 years of rapid development. Since the 1985's"Square Agreement", Japanese Yen had been appreciating in the success 10 years, as a result, the exchange rate between Japanese Yen and U.S.Dollars increased almost to three times. 6. To avoid environmental pollution. The quick economic development caused environmental pollution, which impairs Japanese people's life and the economic development itself, so many Japanese companies invest in the developing countries especially in south-east Asia. 7.To improve companies'key competitiveness. M&A is a shortcut of improving key competitiveness compared with self-reseach and direct import of new technologies.Researches from some world-famous advisory companies indicated that more than 60% of the M&A had been failed. The restrictive factors in Japan's M&A are mainly cultural and social. In 1989, Sony purchased the U.S.A'S Colombia film corporation, which was the largest M&A in that time in japan, but also the greatest loss in Japan's history. It cost 15 years for Sony to digest the result of this M&A and achieve its desired results. It should be said that the gigantic cultural difference was the main factor leading to the failure.Japanese companies have their own distinguishing merits due to the history and culture. Their financing feature: Most funds are from bank loan, which is provided mostly from the company's main banks; The stocks are mostly sold to their business-highly-linked companies, which forms the mutual- stockholding system. Their operating feature: 1. A long-term mode of thinking based on mutual confidence. To achieve a long-term target, the companies use to see effectiveness in future. 2. The coordinative labor-capital relations. The life-long employ system and the salary-and-post-increasing-year-by-year system keep the employees'enthusiasm to develop new technology and open new market. 3. A well-organized market. Many trade relations between Japanese companies tend to be long-termed once they are established. The stable trade relation will make both sides to take positive actions in face of technology development,long-term produce planning and emergencies. The new technology development mode: Funds on research and development of new technology are mostly from Japan's enterprises instead of the government. The enterprises not only import technologies but also make reform on the base of digesting and obsorbing them. Thus products made in Japan are competitive in the world market for its high quality and low price. It should be said that these features of Japanese companies maintain their key competitiveness which be the guarantee and premise of M&A.After experiencing M&A for forty,fifty years, Japan's enterprises are becoming more and more mature, stepping from blindness to consciousness either in choose of strategic target and M&A objective or in estimate of cooperation effects. Nowadays China are on the primary stage in M&A. It is especially important for us to avoid the mistakes made by Japan in 1980s. These points should be paid more attention to: 1. The target must be clear. The enterprise must acquaint itself with what strategic target it means to reach before an M&A, then choose the right company being merged. 2.To do more investigation on objective company and not high evaluate the cooperation effects. Before the actual M&A process, not too more investigation should be made to decide if it is appropriate to effect such an M&A and what kind of prices and terms are acceptable.Thus a sensible plan of M&A could be formed and the risks be reduced. 3.To implement a good reorganization after the M&A completed. The success of an M&A depends on such arrangements. Widely speaking, the reorganization work includes such fields: value chain,regulations,finance,marketing,human- resources and c ountries'experiences. China's enterprises are new participants in M&A. They are lack of theoretical knowledges and practical experiences. It is better to accumulate experiences from small-valued M&A before large ones, and raise the ratio of success in M&A.ulture, etc. 4.To start from small-valued transactions. The small-valued M&A inclines to succeed from the developed countries'experiences. China's enterprises are new participants in M&A. They are lack of theoretical knowledges and practical experiences. It is better to accumulate experiences from small-valued M&A before large ones, and raise the ratio of success in M&A.