China’s Automobile Manufacturing Listedcompany M&A Performance Evaluation

Since the1950s, China’s auto industry has started the past two decades and the automobile industry has been rapid development. China has become the world’s largest automotive production and consumer market in2009.It is the characteristics of the rapid development of China’s auto market. At the same time the Change number of firms in the industry is from less to more, then from more to less. The key characteristics of this change is intense competition, while mergers and acquisitions is the form of the number of changes. Mergers and acquisitions help promote enterprise rapid development,but many studies have shown that the risk of acquisition is great,especially in the cross-border overseas mergers and acquisitions strategy. The success rate of european internal corporate is only50%, a much lower success rate of mergers and acquisitions between U.S. and European companies. The success rate of Chinese companies under the guidance of "going out"strategy is in successlowest rate,including the automotive industry, overseas M&A success rate of only about30%.But with such a huge risk, the number of overseas mergers and acquisitions is increasing year by year, although the risk is huge there are more people to try.I tried to explain reasons that such a huge risk do not scare off the Chinese business, and try to plan for the future M&A constructive suggestions given by its overseas acquisitions of enterprises.This article is divided into six chapters, the main contents are as follows:Chapter one is Introduction, describeing the background and significance of this study, and gives content to explain the ideas and frame structure.First topic of this article is based on the huge risk in the M&A activity of automotive industry and the increase of the number of M&A events.Partially explain this contradiction by describing the increase in M&A events in the automotive industry, and introduceing some reasons of increasing in M&A activity,mainly includingthe gap between China’s automobile industry and the world of car prices remains high;the global financial crisis caused by the U.S. subprime mortgage crisis broke out in2008;the appreciation of the yuan;as well as the transformation of the Chinese consumer market.This article select the "weak" GEELY merger the "strong" Volvo after the economic crisis of the typical automobile industry merger case. To try to analysis and evaluate the results of acquisitions and aim at trying to explain M&A risk and benefits of the relationship with this analysis,then explain the reason for the formation of contradictions, the increasing huge risk M&A events. Secondly, to try to give constructive advice for the future of the automotive industry overseas acquisitions through this analysis.Chapter two is a literature review. This part is mainly divided into three parts, the first part is the overview of the performance of the domestic and international mergers and acquisitions, the second part is the overview of the M&A performance of the automotive industry, the third part is the countermeasures and suggestions to improve the performance of mergers and acquisitions.Firstly, a large number of foreign studies have shown that most corporate acquirer in the year of acquisition events can get a positive excess returns through a variety of methods of inspection are to some extent this view, the specific performance of the share pricerise and profits to increase, indicating that M&A is a synergistic effect.Many domestic referr to foreign research methods, from the M&A performance assessment of several key indicators, finding that the business performance of the enterprise in the short-term ex post is excellent, but to examine from the point of view of long-term operation, mergers and acquisitions mostly did not reach the strategic objectives of the M&A, even failure.However, studies have shown that long-term performance is remarkable, but distinguish between the industries is necessary. Secondly, M&A performance of the automotive industry, the research results more consistent, that is70%of the domestic automobile enterprises overseas mergers and acquisitions are failures from the long-term operational perspective.This is mainly due to the failure of cultural integration, most scholars have suggested that in the auto companies overseas M&A Cultural Integration is the key, focusing on the integration of corporate culture, and the risk of overseas mergers and acquisitions is huge, and to carry out mergers and acquisitions in accordance with the strategic target.Thirdly for high risk of mergers and acquisitions, many scholars have put forward recommendations on various aspects, such as the construction of the external environment, internal construction and so on.The third chapter is industrycharacteristics of the mergers and acquisitions, including three parts, the development of the industry, development Reason of the automotive industry and China’s automotive industry M&A mode.The development of China’s automobile industry is from five aspects,The development of the automotive market-the world’s first automobile on production and sales、 The important role of the automotive industry、The development of the automobile brand、the adjustment of the industrial structure of the automotive industry and Technological innovation and progress in the automotive industry.First, China’s auto market has made significant development in the worldwide production and sales,ranked first;The automotive industry brought about by the development of other related industries and employment solutions makes it an important part of the national economy, and the automotive industry is technology-intensive, developing automotive industry is also conducive to China’s scientific and technological progress;In recent years, China’s independent brand car enterprises through various forms of cooperation, such as joint ventures with foreign factories, joint technology research and development cooperation, and direct overseas mergers and acquisitions has been the rapid development;After a change in number of domestic car prices from less to more, from more to less, the enterprises through mergers and acquisitions continue to grow and develop, a certain degree of industrial concentration has been formed;Technology innovation of the domestic auto companies will learn from foreign advanced technology, through a different form of Sino-foreign cooperation, such as SAIC、Geely acquisition、Huachen commissioned design job, and have made some achievements.Mainly include The theoretical analysis of mergers and acquisitions motivation and the practical causes, from the competitive environment, industry concentration, the financial crisis, and the RMB exchange rate and the impact of WTO accession.On the M&A mode in the automotive industry, the instructions is from the five aspects of the automotive industry.Chapter four is the case studie of Geely’s acquisition of Volvo.Geely’s turnover is less than10times of Volvo’s beginning in M&A.Volvo is known as the world’s safest cars, while Geely just a car in Mainland China enterprises, development about10years, compared with nearly nine decades of development history of Volvo Geely.Yet it is China’s car enterprise that acquire the world’s leading luxury car prices, the typical case itself is worth mining. This chapter describes the Volvo and Geely each position in the industry, development, explaining the success of acquisitions reason from both Geely and Volvo, and using SWOT analysis describes the advantages and disadvantages of success.The key of this merger is the intellectual property rights negotiations.The fifth chapter is the impact of development of GeelyGeely acquisition of Volvo from, talking about the performance of mergers and acquisitions, and from the EVA angle to consider mergers and acquisitions before and after the performance of Geely’schange. The largest M&A success factor is the post-merger integration and integration determines the failure of mergers and acquisitions.To obtain the maximum synergistic effect of mergers and acquisitions, integration is a necessary process, due to this reason Geely also takes certain integration measures, and effects of these measures must reflect the performance of enterprises.By the culture, business, technology, and financial consolidation measures, review the implementation of performance, with a focus on financial performance and integrated performance appraisal-EVA.The sixth chapter describes the conclusions of this study and gives some recommendations for the future of the overseas mergers and acquisitions in automotive industry.This article analysis the performance by a typical case analysis, from the perspective of culture, technology, business, and financial integration.The following conclusions can be concluded:Conclusion one:The M&A can improve business performance, Geely’s EVA has a larger increase before and after the merger, combined with Geely’s post-merger integration strategy in the two years later and Geely "inaction" strategy we can conclude that integration is the core of mergers and acquisitions.Conclusion two:The automotive industry is concentrated capital and technology, the automotive industry in China is in the rapid development and appropriate acquisitions can enhance their international visibility, build brand influence.Conclusion three:Due to the low level of development of China’s automotive industry, overseas mergers and acquisitions can use moderately "loose" alliance approach that is similar to the Renault-Nissan alliance shelving the overall integration and gradually reducing integration obstacles.Conclusion four:In overseas mergers and acquisitions enterprises must give the cultural differences with enough attention, through a variety of different ways to reduce the cultural barriers and to get union support.