Cross-border Mergers And Acquisitions With Chinese State-owned Enterprises Reform

Since the policy of reform and opening was implemented, China has enjoyed miraculous economy growth and progress, and furthermore, China has become one of the global investment heavens. Despite of this, problems still remain. The loss of state-owned enterprises(SOEs) and asset acts as the threat to China's further development. Most of the FDI to China take the form of "Greenfield Investment", which differs from the global trend of Merger and Acquisition(M&A). This has already curbed China's potential to attract more FDI. Though foreign company started to take-over China's SOEs decades ago, yet little progress has been made, owing to the limitation of theory, ideology and law enforcement. There are also many lessons to be learnt. After all, foreign company's takeover of China's SOEs, does have its own merits, which provides a new idea to break reform deadlock. Based on this situation, this study was made to explore oversea M&A and SOEs' reform, analyze policy meaning ,characteristics and remaining problems of foreign takeover of SOEs, and propose policy suggestions. The paper is divided into five chapters. Chapter One is focused on the analysis of status quo of SOEs and the FDI to China. First, it states the status quo of SOEs; second, analyzes economic, political and social factors of China to attract FDI; third, quantitatively and qualitatively analyzes FDI's role in China's economy growth, industrialization, technology progress, optimization of sectors, job creation and development of human resources; in the end, analyze the benefit drive of foreign takeover of China's SOEs. Chapter Two covers the history of SOEs' reform, point out the present deadlock of SOEs and its reform, and explore the reason behind. SOE's reform has lasted over 2 decades, which can be divided into 5 phases. As the reforms deeps, the internal conflicts heats up. Actually, SOEs' reform is not simple an institutional reform, but a huge project of government function, state-owned asset management, social security build-up, macroeconomic control. Chapter Three further explores the benefits of the foreign take-over of China's SOEs, especially to solve present deadlocks. Foreign takeover will not only bring cash, but also the institutional merits, such as corporate governance. By studying two foreign takeover cases, some fair, feasibletakeover methods are summarized. Chapter Four analyzes the M&A related issues, such as the state-owned asset evaluation, monopoly and economic independence, protection of domestic industries, and also settlement of surplus labor, which influences the law and institutional enforcement, and also takeover performance. Chapter Five puts forward the specific policy suggestions to promote foreign takeover of SOEs, construct efficient law enforcement and consultancy service. Specific suggestions include: build an efficient state-owned asset control system, introduce foreign M&A related codes, reform stock market and consultancy service.