Chinese Enterprises’ Overseas M&A In Post-crisis Era: Analysis Of Failure And Corresponding Countermeasures

After entering the21st century, the trend of globalization is increasingly fierce.With the rapid growth of cross-border M&A, researchs on it is becoming an importantpart of international relations research. In recent years, Chinese enterprises’ overseasM&A is also expanding rapidly, especially in post-crisis era(since the outbreak ofsub-prime crisis),Chinese enterprises have increased rather than decreased, setting offa wave of "china’s acquisition of the world". In2011,Chinese enterprises’ overseasM&A increased with a full flowering. Chinese enterprises’ overseas M&A have madea record in both the number(205)of transactions and the amount($42.89billion) ofthem. In the beginning of2012,Chinese enterprises’ overseas M&A is stepping forword, and many of the target companies are the world-class. With a background ofThe U.S. economic downturn and continuous fermentation of the debt crisis in Europe,Chinese enterprises’ wave of acquisitions will constantly impact the development ofChina and the world economy. However, with a later start of cross-border M&A,Chinese enterprises lack of related experience and international competitiveness,many of which are still low-end processing industry. Dominated by state-ownedenterprises, most of Chinese companies lack a sense of responsibility and riskperception, making acquisitions blindly. At the same time, there is still no perfectsupervision and management mechanism on overseas investment in China. There is abig difference in the corporate culture, management systems, laws and regulations,local organizations (such as the Association) between the China and the West. It’sdifficult to integrate smoothly after the merger for most companies. At the same time,overseas M&A of large Chinese enterprises are often labeled a hat of "background ofgovernment", thus the political obstruction is Inevitable. The success rate of Chineseenterprises’ overseas M&A is much lower than the level of Europe and the UnitedStates, resulting in a lot of waste of resources and loss.On the basis of existing research results of Chinese enterprises’ overseas M&A,combined with the specific cases of M&A failure(In this article, failure not only refersto failure of M&A activities, but also the failure of integration after the success oftrading activities),the writer try to make systematic analysis of the reasons for thefailure of cross-border M&A of Chinese enterprises from the three levels of theenterprise itself, their governments and the international environment, and give some feasible countermeasures and suggestions.The article is divided into five parts: The first section details the source, meaning,the existing domestic and international research results of the topic and innovation ofthis paper; The second part is an overview of the Chinese enterprises’ overseas M&A,mainly on the basic concepts of overseas M&A, and briefly introduces the currentsituation and motivation of Chinese enterprises’ overseas M&A; Through review ofseveral typical cases of Chinese enterprises’ overseas M&A, the third part make acomprehensive analysis of the reasons for the failure(the bumpy course of ShanghaiAutomotive’s acquisition of Ssangyong Motor, Huawei’s constantly being blockedoverseas, the failure of China Aluminum’s acquisition of Rio Tinto);On the basis ofanalysis of the specific cases, the author makes systematic analysis of the reasons forthe failure of cross-border M&A of Chinese enterprises from the three levels of theenterprise itself, their governments and the international environment; The fifith partattempts to internalize the international environmental factors, giving correspondingcountermeasures and suggestions from the two aspects of the enterprise itself and therole of Chinese government.