The Research Of National Security Review Mechanism Of Merger And Acquisition

Foreign merger and acquisition is a behavior which foreign capital owner legally control the enterprise of host country by purchasing and holding its assets.National security includes the elements of military, politic, economy and resources etc. In this paper, we will focus on the industry security which is part of the national security. With the gradually opening of Chinese market, more and more foreign-owned enterprises enter into Chinese market and join the activities of merger and acquisition Chinese enterprise. These activities, on one hand, infuse the market fresh blood. They can help Chinese enterprises growth and transform. Also, they can help to improve market system. However, on the other hand, improper and unreasonable foreign merger and acquisition will deprive the local companies’independent capability. It will make the host country’s relevant industry rely on the foreign-owned company and then threaten the national security.The national security review mechanism of merger and acquisition (NSRMMA for short) has significant meaning in every country. When build this mechanism, government should consider that through calling for foreign investments, the local companies can resolve their financing difficult position, they can get advanced management experience and the economic reform can be promoted. However, also, the government need to protect the independence of their local companies from the infringement of foreign company and keep their self-management toward market economy. Therefore, how to balance opening market, attracting foreign investment and protecting national security become the core and difficulty of this system.This paper is divided in five parts. Firstly, I will enter from the case of acquisition of Carlyle towards Xu Gong, introduce and analysis this case, and raise the thinking of how to build the NSRMMA. Secondly, I will define foreign merger and acquisition and National security and limit the meaning of national security in the field of industry security. I will state the effect of foreign merger and acquisition on the national security by analyzing the operation and development trend of foreign merger and acquisition in Chinese market. Thirdly, I will introduce the advantages of American, Japan and Canadian mechanism on balancing attracting foreign investment and protecting national security. That can provide a reference on perfecting our mechanism. Fourthly, I will analysis our current NSRMMA. Fifth, I will give some suggestions. Hope I can help to improve our NSRMMA.