Research On Some Labor Law Issues In Chinese Companies' Overseas Mergers And Acquisitions

Cross-border mergers and acquisitions (M&A) has become the mainstream of international direct investment since 1990s. Plagued by the global financial crisis at one time, it rejuvenates as a result of global economy recovery. Due to China's economy expansion in the past ten years, Chinese enterprises accelerate their strategy of "go global". Statistics shows the amount as well as the volume of Chinese enterprises overseas M&A transactions have increased significantly in 2014. It is expected that overseas M&A market will maintain healthy development in 2015 and an increasing number of Chinese enterprises will implement overseas M&A from their perspective of corporate strategy. It has not been smooth sailing in the whole process. Many ambitious attempt failed finally, for instance, SAIC Motor's acquisition of Ssangyong Motor in South Korea, TCL's acquisition of Alcatel, and Shougang Group's acquisition of iron ore company in Peru. Even some successful deals, like Lenovo's acquisition of PC business of IBM, experienced many twists and turns behind. A large number of cases demonstrate that employment issue has become a key factor in deciding whether one M&A transaction can be successful or not. Therefore, depth study on labor issues occurred during overseas M&A is of great practical and theoretical significance for increasing Chinese enterprises'success probability and elaborating the macro issues of overseas M&A.There are six sections in the Master's thesis dividing into three parts:The first part is the overview of labor law issue in overseas M&A. It analyzes the history, status quo and characteristics of overseas M&A for Chinese enterprises by making reference to relevant domestic and international legislations. The author also summarizes typical labor law issues in international M&A by probing into the impact of employment legal protection over Chinese enterprises'overseas M&A.The second part is the main body. By introducing case analysis, the author elaborates three typical employment issues, namely, inheritance of employment contract, firings or lay-offs and labor union forces. The author discusses the employment legislation and policy in a detailed manner and makes suggestions to Chinese enterprises for their reference. The objective is to alert Chinese enterprises to pay attention to the local employment legislations, and unnecessary losses can be avoided by reducing the randomness and blindness.The third part is the summary and reflection. The author puts forward some thinking based on the analysis regarding the Chinese enterprises' coping mechanism: Chinese government shall exert influence on the establishment of new international investment regime by participating in the making of higher standards of international investment rules in bilateral, regional and multilateral international arena, thus creating a friendly overseas M&A environment for Chinese enterprises. In addition, domestic legislation regarding overseas investment insurance scheme and its related supporting regime should be established to provide guidance and protection for Chinese enterprises in implementing overseas M&A.