An Empirical Study Of Bilateral Diplomacy Relations On Overseas M&A Of Chinese Enterprises

With the deepening of economic globalization and the multipolarization of the world pattern,the scale of OFDI has increased significantly.By 2016,the flow of OFDI reached $196.15 billion,ranked second.And the stock of OFDI reached $1.35739 trillion,ranked sixth,highly anticipated results are achieved.Especially overseas M&A,as the main forms of FDI,are also increasingly active.The scale has risen steadily,destination fields are becoming more and more widely,the location choice are becoming more and more mature.However the past data shows that,although lot's Chinese enterprises overseas M&A is successful,the overall poor performance.The success rate of China overseas M&A is lower than the world average.Today with the active practice of "going out" in China,how to promote enterprise overseas M&A and improve enterprise overseas M&A success,which also be a stage in Chinese enterprise how to better future key issues facing OFDI.There are many factors influencing the overseas M&A of enterprises,among which the political factors are one of the important factors.As an important factor of bilateral political relations,bilateral diplomatic relations have been given a new era mission in cross-border M&A.On the basis of combing the literature and to grasp the characteristics of the facts,this study tries to guide mechanism,security mechanism and lubrication mechanism to illustrate the aim.The government has played a leading role in considering how to choose the location selection in order to improve the success rate of overseas M&A.It's based on the government's foreign policy guidance on the host country.Enterprises need from the home country government institutional and legal support to protect their interests in the host country.Home country government can exert diplomatic influence to provide special protection for FDI.A good diplomatic activity can alleviate the tension between the two countries,solve the series of problems,reduce the difficulty of transnational enterprises entering the overseas market,and lubricate the overseas investment.Through the theoretical mechanism,this paper puts forward the basic hypothesis: good bilateral diplomatic relations can help improve the success rate of Chinese enterprises' overseas M&A.To test whether assumptions are correct,from the establishment of diplomatic ties with time,high-level visits,friendly city and a comprehensive measure of bilateral political relations,the paper uses the data of China's overseas M&A in 77 countries of the micro enterprise and bilateral diplomatic relations from 2014 to 2016,involving1308 M&A cases and establish Logit and Probit model to empirical argumentation.The empirical results show that friendly bilateral diplomatic relations can enhance the success rate of overseas M&A.Friendly high-level exchange of visits can help to achieve the bilateral investment agreement,thus enhancing the success rate of overseas m&a.The friendly high-level visits between China and developed countries are more conducive to the success of M&A.Bilateral diplomatic activities,mainly high-level visits,can improve the success rate of overseas M&A in high-tech industries.The study result shows that the diplomatic and political will affect national economic activity.It also injected new connotation.China's foreign policy is an important aspect of economic diplomacy as a foreign policy more and not easy to ignore.To promote success rate of overseas M&A,it can enhance national high-level exchange of high-level visits to promote bilateral investment treaties signed and to increase the establishment of friendly city.Giving much more attention to political interaction in the developed countriesand the establishment of diplomatic ties between China and countries in the short term.