The key success factors of mergers and acquisitions in China for foreign investment
Date Issued
2004
Date
2004
Author(s)
Chiun-pei, Wu
DOI
zh-TW
Abstract
In line with the robust economic growth in China these years, cross-border mergers and acquisitions between foreign investments and Chinese local businesses have been increasing and amounted to US$ 4 billion in 2003. China has been one of the three largest mergers and acquisitions markets in Asia. Mergers and acquisitions are deemed as the fastest approach to fulfill the growth strategy of corporate. However, mergers and acquisitions require high degree of resources comprehension and alignment, also technically grounded by advanced professional knowledge and skills to implement. Therefore, no less than fifty percent of mergers and acquisitions, especially for those of cross-border, have been proved to be failure according to numerous researches. As China is at its early stage of a mergers and acquisitions market for foreign investments, significant potential of the market size and scope are reasonably expectable. It is considered worthy to study how to develop a higher success rate for mergers and acquisitions in China, and further being as practical reference to benefit corporate.
This thesis aims to conclude, based on cases study and the comparison derived from observation and existing researches also theory models, the key success factors of mergers and acquisitions in China for foreign investment. Three symbolic cases, including the 50-50 joint venture between Nissan and Donfeng, the acquisition of 50% shareholding of Shanghai Bell by Alcatel and the acquisition of 17.89% shareholding of Shenzhen Development Bank by Newbridge Asia, have been selected from automobile industry, telecommunication industry and finance industry respectively.
The analysis will be focused on the motives and the strategic purposes of the parties involved in the merger or acquisition, and further to the consequent resources exchange via the merger or acquisition transaction. The conclusions will cover the key factors of a successful merger and acquisition negotiation in both fundamental and technical aspects. The fundamental factors include:
1.the justification of implementing merger and acquisition as growth strategy considering the industrial nature;
2.the fulfillment of both parties’ strategic purposes regarding the terms of the transaction;
3.the strategic also operation value of the party to be acquired; and
4.the foreseeability of the synergy and feasibility of the overall operation post the merger and acquisition.
To the other hand, the technical factors shall comprise factors below:
1.the support from governmental policies;
2.the financing feasibility; and
3.the effective negotiation strategies and skills.
It’s found that the mergers and acquisitions market in China is still way from mature, the overall legal system is at the so-called “temporary stage” and governmental approval granted case by case on the mergers and acquisitions for foreign direct investment is still required. Therefore, the governmental policy support gained by mutual trust, then reciprocity by phases between the Chinese authorities and foreign acquirers appears as the very critical successful factor for the mergers and acquisitions, especially for the transactions involved with state-owned assets or businesses. Besides, given the comparatively weak information transparency in China, the transaction pattern decision, either in shares purchase or assets acquiring format, will be primarily decided by the foreign investors’ understanding and the familiarity of the financial also business conditions of the parties to be acquired. The success rate will be significantly enhanced if both parties involved in the merger and acquisition transaction have previous experiences of cooperation or joint venture, or have reached a reasonable mutual trust foundation to proceed to the transaction.
Subjects
外資併購
談判成敗因素
mergers
foreign investment
acquisitions
Type
thesis
File(s)![Thumbnail Image]()
Loading...
Name
ntu-93-R89724035-1.pdf
Size
23.31 KB
Format
Adobe PDF
Checksum
(MD5):7df7bcf460d0712fc141ee815c654e92