Motivation Of Cross-border Mergers And Acquisitions Of Chinese Companies And Prospects

With the acceleration of the globalization and liberalization of finance and investment after the second world war, multinational corporations have developed very quickly. Mergers and acquisitions become international phenomena and thus bring the global tide of cross-border M&A. Newly establishment method are now making place for Cross-border M&A, which now plays an increasingly leading role in foreign direct investment area.Gradually, Chinese corporations incline to choose cross-border M&A method to implement their internationalization strategy. Especially in recent years, cross-border M&As of large scale by Chinese corporations have emerged, and it has turned out to be a prelude of China's economy stepping into a new phase of development and becoming a more important part of the world economy. Through the comparison to other countries and analysis of motivation and effects of cross-border M&As by Chinese corporations, we can find that Chinese enterprises emphasize more on acquiring technology, market, brand and resources in global area to build and strengthen their own advantages in international market competition by means of cross-border M&A. Although the cross-border M&A cases made by Chinese enterprises are increasing constantly, which demonstrate the fast-developing tendency, it's still in a budding stage. We should take all the risks and difficulties into fully consideration before taking actions.The paper is divided into five main parts:Part one introduces the conception of foreign direct investment and its choices of main methods. Afterwards, related influential theories of FDI and M&A are summed up and appraised. By the analysis of the general situation and characteristics of global M&A development, it is believed that M&As are now the main tune in foreign direct investment.Part two shows the present status of cross-border M&A of Chinese enterprises by analyzing the general situation and characteristics compared to other countries. Although the steps of the cross-border M&A made by Chinese enterprises are expediting, a lot of differences and shortages still exist.Part three puts emphasis on the analysis of the motivation, effects and trend. The main targets of our enterprises'M&A practice are not only acquiring advantages, but also the economic and strategic effects which brought to the corporation and its motherland by taking and expanding these advantages. By the analysis of possibilities and empirical study, it shows an constant upward tendency of the cross-border M&As of Chinese enterprises.Part four analyses the risks and challenges which the Chinese enterprises may encounter with. The performance after the cross-border M&A cannot be quite optimistic. There are a lot of risks in the whole process of the cross-border M&A, such as in the stage of decision-making, implementation and conformity. The TCL case can be a good example.Part five brings forward relevant countermeasures and suggestions, regarding both aspects of the government and enterprises.