Phenomenon Of Perspective Cross-border Mergers And Acquisitions Industry Backbone Enterprises In China

Based on the development of economy, many multinational enterprises have been changing their investment strategies in China such as abandoning the cooperation style and joint venture style. Their attention is being transferred to merger & acquisition style, and most of their target local companies are very important in the local industry. There are three points to summarize the M&A: The multinational enterprises must have dominant control in the new corporation; the target local company must be very important in the industry; and the investor earn at least 15%.Although these M&A lead to Economies of scale and savings of inputs on research & development, we are taking risk of being monopolized. This thesis tries to analyze the motivation of the multinational M&A according to the classic FDI theory such as Monopolistic Advantage Theory and Resource-Based Perspective .The results is that these multinational enterprises will get monopolization status probably by holding and taking advantage of the profitable resources in our local companies, eliminating or reducing competitors and so on. Besides, local companies are willing to accept the transnational M&A. There are four reasons. First, multinational enterprises have attractive advantages. Second, local companies are unwillingness to be merged by another local company and Management Buy-outs have difficulties. Third, local governments encourage transnational M&A actively. At last, lots of barriers and obstacle prevent local companies from financing in our capital market. This thesis examines the several motivations of the multinational M&A.