A Comparative Study On The Performance Of Cross Border Mergers And Acquisitions Of Chinese Automobile Enterprises

Under the background of economic globalization,global production factors flow become more active and fast,free flow of capital leads to more fierce competitions.The larger enterprises expand themselves by cross-border mergers and acquisitions to seize more markets in the world and achieve the final goal of enterprise development.Since 1990s,under the influence of global industrial upgrading,rapid development of economic and financial industry,and integration of world economy,there are more cases of mergers and acquisitions which become popular in the world.After joining WTO,China has witnessed rapid growth of economy.There are more Chinese enterprises involved in cross-border mergers and acquisitions to get overseas resources and foreign mature technology so as to enlarge the scale,enhance their own strength.Although there are more cases of mergers and acquisitions and the scale is gradually increasing,the failure rate is still very high.Many companies did not complete the task after the merger,and did not get satisfactory results in business performance.Some even lead to losses because of cultural integration problems.Therefore,the integration after M&A is very important,whether the integration is successful is the key to the success of M&A.The success rate of M&A in Europe is 50%while the rate of M&A between Europe and American companies is lower.However,the rate of Chinese enterprises overseas mergers and acquisitions is much lower,only 30%of M&A cases are successful.The history of Chinese enterprises to carry out cross-border mergers and acquisitions is relatively short,so the development of mergers and acquisitions is still at primary stage.We have not acquired correct experience and methods and still need to probe in the way of M&A.Entering the international market and realizing internationalization has always been the strategic goal of the local state-owned enterprise-Shanghai automobile group Limited by Share Ltd.In order to achieve this goal,SAIC has made many efforts,hoping to enhance the strength through mergers and acquisitions.In 2004,there was a M&A between our company and Korean SsangYong Motor Company,hoping to enhance our technology and comprehensive strength,which is China's automobile enterprises transnational mergers and acquisitions precedent.However,in the process of M&A integration,due to a series of conflicts,finally the M&A failed.SAIC mergers and acquisitions case is worthy of other automotive enterprises to learn.GEELY Group is a model of private enterprises in China,for it was named the national top 500 enterprises for four years in a row.And it is also in the list of top ten in the field of automobile production and sales in China's auto industry.GEELY had pay special attention to Volvo for eight years.In 2010 the M&A eventually took place.GEELY Group was very discreet in the process of integration after mergers and acquisitions.Actions were taken after careful thinking,so it finished the work excellently in the process of integration,which is a good example for other car enterprises.This article compares the case of failed M&A of SsangYong by SAIC with the case of successful M&A of Volvo by GEELY.It analyzes short-term and long-term achievement of SAIC and GEELY companies,gives an objective evaluation of the two cases,and sums up successful experience and lessons of failure to provide reasonable advice for automobile enterprises to carry out cross-border mergers and acquisitions in the future.This paper consists of six parts.The first part is the introduction,introducing the background and research of China's automobile enterprises transnational mergers and acquisitions performance,expounds the basic research methodology and the framework of this article,as well as the innovations and deficiencies.The second part explains the concept of M&A and M&A motivation theory.In the literature review,the author introduces the domestic and foreign scholars' research on the performance of automobile merger and acquisition.The third part and the fourth part respectively introduce the background of the merger and acquisition of SAIC and GEELY,and analyze the motivation and process of M&A in the two cases.The event study method and the EVA index method are used to make an empirical study.The fifth part analyzes the integration performance of SAIC and GEELY Group and the factors that affect the performance of integration.In the sixth part,the author puts forward the existing problems of SAIC and GEELY acquisition cases,summarizes the experience and lessons of two merger cases.Finally the author comes up with some measures and methods that should be taken in later cross-border M&A,which has realistic meaning.