Analysis of the reasons for the overseas mergers and acquisitions of Chinese enterprises under the financial crisis
Time: 2009-4-23 7:23:10 Author: Xiong Zhong Number of reads: 114
< p>Keywords: Analysis of the reasons for the boom in overseas mergers and acquisitions of Chinese enterprises during the financial crisisAbstract: Abstract: The advent of the international financial crisis has caused a recession in the world economy, but for Chinese enterprises, it means new investment opportunities. As a result, a new round of overseas mergers and acquisitions has emerged. This article introduces the current situation of overseas mergers and acquisitions by Chinese enterprises, and analyzes in detail the reasons for the overseas mergers and acquisitions of Chinese enterprises under the financial crisis from four aspects.
1. The current situation of overseas mergers and acquisitions by Chinese enterprises
(1). The overseas mergers and acquisitions of Chinese enterprises mainly involve two major directions: one is natural resources; the other is technology property rights?< /p>
(2) Are mergers and acquisitions generally targeting companies in developed countries?
(3) In recent years, China has accelerated the implementation of its going global strategy, encouraged and actively supported Chinese companies with comparative advantages have gone abroad to carry out various forms of mutually beneficial economic cooperation, and the scale of overseas mergers and acquisitions has become larger and larger.
In 2006, China's non-financial overseas direct investment amounted to US$17.63 billion, a year-on-year increase of 43.8%
In 2007, China's non-financial overseas direct investment amounted to US$24.84 billion, a year-on-year increase 40.9%. By the end of 2007, China’s nearly 7,000 domestic investment entities had established more than 10,000 overseas direct investment enterprises in 173 countries (regions) around the world, with a cumulative net overseas direct investment (referred to as stock) of US$117.91 billion, of which non-financial category 101.19 billion US dollars
In 2008, China's non-financial overseas direct investment was US$40.65 billion, with a year-on-year growth of 63.6%. In 2008, Chinese domestic investors*** made direct investments in more than 1,500 overseas companies in 112 countries and regions around the world.
In the past two months of 2009, there have been 22 overseas mergers and acquisitions in China, involving more than 20 billion US dollars. This amount increased by 2% from the same period last year and was also the highest level in the same period in history. For example, Chalco acquired Rio Tinto and China Minmetals wholly acquired the world's second largest zinc miner; while Hunan Valin Iron and Steel acquired shares in the third largest iron ore mining company... Recently, there have been reports of multiple companies in China News that car companies are interested in bidding for overseas automakers.
In the face of the international financial crisis that continues to affect the global economy, Chinese companies' enthusiasm for overseas mergers and acquisitions has not diminished at all, and they are even more eager to try it. The reasons here are worth analyzing.
2. Analysis of the reasons for the overseas mergers and acquisitions of Chinese enterprises under the financial crisis
(1) Chinese enterprises have the conditions to go global.
1. China’s national strength has reached the stage of going global. At the same time, the government’s support has been continuously strengthened, and going global has been regarded as a national development strategy.
2. After 30 years of reform and opening up, China already has a number of enterprises with certain technical and economic strength, familiar with international operation and management, and able to adapt to the fierce competition in the international market.
3. Some enterprises have gone abroad and achieved excellent results internationally. These are the prerequisites and valuable experiences for Chinese enterprises to implement the "going global" development strategy.
(2) The necessity of overseas mergers and acquisitions by Chinese enterprises
1. Overseas mergers and acquisitions by enterprises to invest in entrepreneurship can promote the two-way flow of funds, which is conducive to expanding domestic demand and maintaining growth.
Overseas mergers and acquisitions can stimulate the export of a large number of domestic building materials, equipment, machinery, etc. through the establishment of overseas economic and trade cooperation zones, use foreign demand to drive domestic demand, drive the export of domestic goods and labor services, and thus accumulate more capital. Invest in the domestic economy and maintain sustained, coordinated and healthy development of our economy.
2. Through overseas mergers and acquisitions, Chinese enterprises can participate in international cooperation, gradually become familiar with the international market, cultivate and train professionals who are proficient in international investment, learn advanced foreign skills and management experience, and improve the international competitiveness of enterprises. Create conditions.
3. Through overseas mergers and acquisitions, enterprises transfer their export production bases to relatively less developed countries or regions with fewer barriers. It is helpful to bypass various tariffs, anti-dumping, countervailing and other trade barriers and increase the export of products. Improve the foreign economic and trade structure and make fuller use of the comparative advantages of capital-importing countries.
4. It is conducive to resolving development bottleneck constraints in domestic environmental resources and other aspects.
The sustainable development of China's economy and society has increasingly faced serious constraints on resource bottlenecks and environmental capacity. The most direct way to solve this dilemma is overseas mergers and acquisitions, using the international market and world resources to ease domestic Environmental and resource pressures.
5. From the perspective of the balance of payments, overseas mergers and acquisitions by domestic enterprises also have a positive effect on promoting the balance of international payments.
(3) Overseas mergers and acquisitions by Chinese enterprises are driven by their own internal dynamics.
1. Occupy the market.
Expand new geographical markets and expand market scale. Compared with the slow product export model, overseas mergers and acquisitions produce quick results and have a large impact. Moreover, mergers and acquisitions can use the leverage effect of equity to achieve the effect of "making a big difference". For example, when Lenovo acquired IBM's PC business, its main purpose was to capture the market.
2. Strategic considerations for obtaining energy and resources.
my country’s energy resources are highly dependent on foreign countries. A large amount of energy resources are imported but the lack of a say in price makes the import of energy resources frequently suffer in terms of price. To change this situation, in addition to increasing the self-supply capacity of energy resources, we must also engage in overseas mergers and acquisitions and participate in energy resource development and cooperation. Mergers and acquisitions are a shortcut. For example, Australia, which is rich in resources, has become the country with the largest number of cross-border mergers and acquisitions by Chinese-funded enterprises, accounting for more than 30% of China's total overseas mergers and acquisitions.
3. Obtain core technology.
Chinese enterprises lack strong independent R&D capabilities and key core technologies, and therefore lack sustainable international core competitiveness. Therefore, the merger of foreign enterprises with rich R&D capabilities and technology patents is a problem that many want to obtain. The preferred method adopted by Chinese enterprises with technological advantages. For example, after Shanghai Electric acquired Akiyama Printing of Japan, it retained all its patents and most of its technical personnel, allowing our related printing technology to enter the international advanced ranks over 15 years?
4. Obtain a brand
< p>Chinese enterprises have long been at the low end of the world's production value chain in the international industrial division of labor. They do not have their own brands and are mainly engaged in "OEM production." One of the shortcuts to change this backward situation is to acquire brands and technical resources through mergers and acquisitions of internationally renowned multinational companies.(4) Under the financial crisis, Chinese enterprises face the best opportunity for overseas mergers and acquisitions
1. The financial crisis makes the acquisition price valuation of overseas enterprises lower.
Looking at the price of corporate mergers and acquisitions from a long-term perspective, now is a better time, because affected by the financial crisis, the price-to-earnings ratios of many companies have dropped significantly, and the current prices are relatively low. In addition, the current cost of acquisition capital is affected by the international financial crisis. Money in the global capital market is generally tight. However, China's bank capital adequacy ratio is relatively good, there is a lot of foreign exchange, and the exchange rate is relatively strong, so the capital cost of China's capital market is relatively low.
2. The financial crisis accelerated corporate restructuring.
Every time a crisis comes, the flow of production factors accelerates and corporate restructuring accelerates. Because it is necessary to adjust the economic structure through the flow of factors and the reorganization of enterprises, so that the original unbalanced economic relations can reach a new balance. In the shadow of the financial crisis, China is one of the few countries that can still provide bank funds for companies' overseas acquisitions. This naturally gives Chinese companies the advantage and impulse to make overseas acquisitions.
3. The two-way needs of the acquirer and the acquired party.
Some countries whose economic main body is the export of resource products have long relied on revenue from oil and mineral resources to support their national economies. However, due to the decline in global resource and energy prices caused by the international financial crisis, these countries' finances are unsustainable and they are in urgent need of financial transfusions. When these countries can no longer seek financial support from declining European and American banks, China can lead them out of their predicament by purchasing energy products.
After 30 years of reform and opening up, China has now become the world's major resource demander. Facing the financial tsunami, it is indeed a good time for energy companies to acquire overseas industrial energy assets. Chinese companies' overseas mergers and acquisitions not only shoulder the responsibilities of being a great power, but also gain access to scarce resources.
However, in the context of further deepening financial turmoil, we must clearly see that the cross-border investment of Chinese enterprises has just started, the scale is still relatively small, and the gap is still obvious.
Objectively speaking, many companies in our country are currently having a hard time, which to a certain extent increases the difficulty of our overseas mergers and acquisitions. But compared with foreign companies, our company has far fewer difficulties and its advantages are much more obvious.
Therefore, only by basing ourselves on ourselves, looking at the world, resolutely carrying out overseas mergers and acquisitions, and boldly carrying out cross-border operations can we form characteristics and establish advantages in the increasingly fierce international competition. Through overseas mergers and acquisitions, we can quickly shrink our business. The distance from the world's leading enterprises will greatly improve the level of my country's manufacturing industry, complete the leap from "Made in China" to "Created in China", and ultimately achieve two-way integration and win-win results.
〔1〕Lin Su. Ren Qinqin. Chinese enterprises must be cautious when conducting overseas mergers and acquisitions under the financial crisis. Economic Information Daily, March 2009
〔2] Zhou Haijiang. China Enterprises "going global" face the best opportunities People's Daily Online March 2009
〔3〕Chen Guoqing. Opportunities and challenges for Chinese enterprises going global under the financial crisis Personal blog December 2008