SAIC And Geely Comparative Analysis Of Cross-border Mergers And Acquisitions

Economic globalization intensifies competition between enterprises which makesthe application of cross-border acquisitions more important especially for large andmedium-sized enterprises. There is a rising trend of the size and number of globalacquisitions and also the trading volume since the1990s driven by extrinsic factorsincluding industrial upgrading, deregulation and restructuring globally. With the fastdevelopment of Chinese enterprises and increasingly open international markets,many companies of China are pushing into cross-border acquisitions. It has become amethod of vital importance of China’s foreign direct investment. Chinese enterprisesare trying to achieve the fastest expansion with the critical resources and advancedtechnology they obtain from international acquisitions.Although there are many cases of acquisitions, only some of them succeeded.The financial performance and business mediocre of most companies was far fromwhat they expected. Cultural integration plays an important role in acquisitions whichcould determine success or failure. The uniqueness of Chinese culture brings a greaterchallenge to the Chinese enterprises in acquisitions, especially on cultural integration.And the lack of experience and method makes it harder for Chinese enterprises whichare still in the exploratory stage of acquisition."Move out of Shanghai, go internationalization," has always been a strategicvision for SAIC and SAIC made many efforts in recent years to achieve the goal. Theacquisition of Ssangyong Motor Company in2004was the first iconic case ofcross-border acquisitions among domestic auto companies. Although SAIC took aseries of measures in the integration process after the acquisition, it still failed at theend. SAIC’s experience in acquisition and the integration process bring a warning toChinese enterprises. While the private enterprise Geely Group merged Volvo---an enterprise with along history---with$1.8billion, which was referred to as "snake swallows elephant".But it was just a small step of Geely’s whole acquisition plan. Geely’s acquisitionstarted from2002and today it is still going on without interruption. Geely’sperformance could totally explain its excellent work of acquisition and integration andit is an excellent model for Chinese enterprises.There are five parts of this paper. In the first part, the article illustrated thebackground and significance of studying acquisitions of Chinese enterprise,introduced the domestic and foreign literatures about international acquisition andfinally elaborated the main innovation of this paper.The second part introduced the basic situation of Shanghai Automotive Groupand Geely Automobile Group and analyzes the motivation of the two companies. Thethird part summarized the acquisition process and the integration process of SAIC andGeely. The fourth part comparative analysed the performance of SAIC and Geelyfrom financial indicators, human capital consolidation effects and effects oforganizational cultural integration.Section V discussed the enlightenment of the acquisition cases of SAIC andGeely and proposed the issues of concern that should be focused on of acquisitionsand the integration process, which has practical significance.