| With the development of social economy in recent years,Chinese enterprises are going abroad to seek for development.Overseas mergers and acquisitions are becoming increasingly frequent for the Chinese enterprises to make investment abroad.Due to the unprecedented financial crisis in 2008,world economy had suffered large negative shocks.The foreign capital economy of China could not be excluded from this financial crisis with decrease of investment activities and amounts in foreign countries.However,under the severe slowdown circumstance of global economy,many Chinese enterprises still went abroad to seek for development opportunities because of strong support by Chinese national and provincial governments.Although brimming with confidence,Chinese enterprises found it extremely difficult to implement overseas mergers and acquisitions.There are all kinds of resistances and risks on the road of overseas mergers and acquisitions for Chinese enterprises.According to failures of overseas mergers and acquisitions cases in recent ten years,this paper concludes that correct and effective responses to political risks play significant roles in achieving successful overseas mergers and acquisitions for Chinese enterprises.Along with the enhancement of China's comprehensive power,there will be increasing resistances to overseas mergers and acquisitions of Chinese enterprises resulted from political risks.And political risks have become the critical factors to achieve success in overseas mergers and acquisitions.This paper analyzes and studies political risks of Chinese enterprises' overseas mergers and acquisitions,combines theory researches with example analysis,and explores corresponding preventive measures and countermeasures according to sources and characteristics of political risks.Firstly,this paper introduces the concept of enterprise merger and acquisition and relevant theories,mainly including general theories of mergers and acquisitions,theories of international direct investment and theories of transnational merger and acquisition.In this part,this paper focuses on the representative research results of predecessors and gives brief comments.Secondly,by tracing back the development history of Chinese enterprises' overseas mergers and acquisitions,this paper briefly describes current situation and characteristics,and summarizes motivations and risks of Chinese enterprises' overseas mergers and acquisitions,and then analyzes political risks.Thirdly,the paper makes a deep exposition of political risks from the macroscopic andmicroscopic aspects.Political risks in the new century show the following characteristics: policy limiting being the main form of creeping expropriation,non-governmental groups playing more important roles,and more frequent discriminatory political interferences.Fourthly,this paper analyzes the sources and explains the causes of political risks,including following four aspects: national security of host countries possibly threatened by overseas mergers and acquisitions in sensitive industries,exaggeration of China Threat Theory,policy changes & protectionism in host countries and turbulent political scene in host countries.The sources of political risks are complex with wide varieties.The forms of political risks are totally different in different countries and regions.In developed countries,the sources of political risks will be trade protection,nationalism and interventions by discriminatory policies.However,in less developed countries in the Middle East and Africa,the sources of political risks will be turbulent political scene and wars.With significant enhancement of China's economic strength and the rising international status of China,some host countries always treat China's development through tinted glasses.Normal business transactions carried out by Chinese enterprises are read as Chinese government robbing and trying to control world resources by host countries.Due to so much prejudice against Chinese enterprises,these countries are always bent on interfering in Chinese enterprises' overseas mergers and acquisitions,even drive Chinese enterprises away by adopting mandatory interventions.Chinese enterprises will meet much more interferences when carrying out overseas mergers and acquisitions in resources industries and energy industries.Success rate of the above-mentioned overseas mergers and acquisitions is always very low.These transactions will be reviewed strictly by safety review organizations in host countries,which will extend transaction time and increase transaction costs of Chinese enterprises.In the end,host governments will refuse these transactions by the excuse of threating national security of host countries.After the above studies and analysis,this paper gains a deeper and clearer understanding about political risks.Finally,this paper puts forward corresponding risk management countermeasures and preventive measures from national level and enterprises' level.Before carrying out overseas mergers and acquisitions,the most critical work of risk assessment is to fully understand relevant laws,regulations and review procedures in host countries.In this way,political risks can be avoided from the sources effectively.If possible,select non-sensitive industries as targeted industries to avoid policy constraints of key industries by host countries.Improve the overseasinvestment risk assessment system and early warning mechanism.Provide powerful backing for Chinese enterprises to carry out overseas investment through comprehensive and accurate analysis and evaluation of investment risks;and promote the steady and healthy development of Chinese enterprises.Realize Chinese government's unified management of assets of overseas mergers and acquisitions.Chinese enterprises' overseas mergers and acquisitions shall be controlled steadily and orderly.Public relations activities are very important during overseas mergers and acquisitions.Chinese enterprises shall grasp the dominant position of public opinion and positively spread information which is beneficial to the interests of Chinese enterprises.Chinese enterprises shall take initiative to strive for a relaxed and harmonious political environment for overseas mergers and acquisitions.Therefore,political risks can be reduced and eliminated.Chinese government should strengthen cooperation with other countries and provide stronger security assurance for Chinese enterprises' overseas investment through signing bilateral investment treaties with other countries.Establish and improve overseas investment protection system to protect the economic interests of Chinese enterprises and transfer political risks.In the same time,examination and approval system of investment insurance for Chinese enterprises' overseas mergers and acquisitions shall be improved.Chinese enterprises shall select joint venture or cooperative business operation.Under this mode,the interests of Chinese enterprises and host countries' enterprises are tied together.With the advantages of local network connections and public relations ability of host countries,entry barriers and political risks will be reduced.Chinese enterprises shall take the initiative to assume social responsibilities of transnational corporations and strengthen communication with host governments and local citizens to reduce the cognitive conflict caused by cultural gap.Chinese enterprises shall set up good enterprise images through making positive contributions to the economic and social development of host countries.By this way,Chinese enterprises will achieve recognition by local government and citizens as time passes,which will reduce incidence of political risks. |
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