The Study On The Cultural Integration Risks In M&A For Chinese Enterprises

Recent years, China’s overseas mergers and acquisitions is booming. In 2008, China’s mergers and acquisitions rose to S 28 billion, the third largest in the world. However, from the point of the effect of actual implementation, the performance of China’s overseas mergers and acquisitions is not optimistic, the success rate is below 40 percent. The result of cultural integration is very important in determining the performance of M&A. Cooper & Lybrand (1982)’study showed that 85% of CEOs recognized that differences in management style and corporate culture is the main reason for failure of M & A. Based on this background, this paper focus on the cultural integration risk of China’s overseas M & A.This paper comprises of five parts. First, the introduction part of this paper introduces the background and significance of this study, the structure of the paper, as well as the paper’s innovative points. The second part list formal literature on cultural integration risks in overseas M & A systematically. The third part is the simulation part illustrating the risk of overseas M & A cultural integration. It is also the core part of the paper. In this part, game theory is innovatively applied to overseas M & A background to explain the relationship among cultural differences, trust and the level of cooperation relationship in the process of overseas mergers and acquisitions. Based on the research, pre-merger cooperation experience will affect the cultural differences between the two sides and after the process of acquisition, the cultural differences will affect the trust and cooperation between the two sides, and ultimately affect the integration of the results. The fourth part is the case analysis part. In this part, we introduce the case of Wanxiang Group TCL, followed with a comparative analysis. Final part concludes the paper and puts forward policy recommendations and directions of further research.