China's Participation In Cross-border M & As Countermeasures

Under the world trend of economic globalization and regional economic integration, a big wave named Cross-border Mergers and Acquisitions (Cross-border M&A), has surged on the world economic sea. The Transnational Corporations (TNCs) serve as the executants in the aim to strengthen their economic status and implement their global strategies. According to World Investment Report 2001, the total value of Cross-border M&A in the year 2000 surpasses 1,100 billion USD, and the proportion of Cross-border M&A in the Foreign Direct Investment (FDI) has soared from 52% in 1987 to 91.7% in 2000. The Cross-border M&A, as a means of investment has become the major power to promote the increase of FDI and the major form of FDI. By spreading over the world and having almost all countries in the world economy involved, the Cross-border M&A and their following reconstructions of the world enterprises present an international quality, and thus greatly influence the development of the international economy, and at the same time confront the involved countries, especially the developing countries, with great challenges.After China's entry into the World Trade Organization (WTO), with the deepening of the reform in the state-owned enterprises (SOE), China is more and more involved in the wave of Cross-border M&A. On the one hand, China, as an ideal market with rich natural resources, low-priced labor force, and more importantly a big consumption of market both realistic and potential, has gained increasing concern of the TNCs. Only by carrying out their Cross-border M&A toward China's enterprises, can the TNCs take advantage of China's original production and distribution, enjoy the preferential policies, and in the meantime keep the core technology within corporations. All these above advantages not only help the TNCs reduce the number of rivals, but also speed up to enter into the market of China. In addition, disadvantages rooted from China's old ways of introducing foreign investment and problems existing in shortage of fund and surplus capacity urge China's enterprises to expect to develop with the support of foreign corporations in order to avoid elimination in the world economic competition. The two aspects mentioned above form the premise and foundation of China's accepting in Cross-borderM&A. On the other hand, confronted with the glaring foreign TNCs, China's enterprises ought to adjust itself to the wave of Cross-border M&A happened on the land of China, so as to keep a comparative independence of China's national industry, and to be well equipped to go abroad and carry out international M&A. On the whole, it is an inexorable trend for China's enterprises to step out and implement Cross-border M&A. It can accelerate to realize the leap-formed development of productive forces, perfect the socialist market economic system, meet the challenge of China's entry into the WTO, make good use of natural as well as human resources and the markets both inside and outside, expand the scale of the TNCs of China, and promote the adjustment of economic structure and the development of opening to the outside world. Besides, with the enhancement of the national comprehensive strength, the preliminary establishment of market economy, the entry into the WTO, the formation of the large-scale TNCs, and the improvement of the infrastructure, proper circumstance have been created for the Chinese enterprises to carry out their own Cross-border M&A. Therefore, all the mentioned conditions provide China with the ability to participate in the international M&A. In short, it is possible and essential for China to adopt the means of Cross-border M&A to utilize foreign funds and invest outside China.However, it remains a new study for China to utilize and implement Cross-border M&A. Although exploration has been made, the relevant practice is still in its first stage of development, where much fundamental work is impelled to be done on the threshold. At present, the obstacles that hinder China to utilize and implement M&A internationa...