StudentShare
Contact Us
Sign In / Sign Up for FREE
Search
Go to advanced search...

Merger and Acquisition in China - Coursework Example

Cite this document
Summary
The author of this current paper under the title "Merger and Acquisition in China" aims to identify the advantages and disadvantages of the mergers and acquisitions activity in China by analyzing the recent fallout of the Danone and Wahaha group. …
Download full paper File format: .doc, available for editing
GRAB THE BEST PAPER94.4% of users find it useful
Merger and Acquisition in China
Read Text Preview

Extract of sample "Merger and Acquisition in China"

Download file to see previous pages

The open-door policy initiated by Deng Xiaoping in China in1992 with the intention to push forward China’s economic progress brought in considerable wealth in the form of Foreign Direct Investments (FDI) (Galbraith, 2000). This policy enabled institutional change (North 1990), which in turn created opportunities for investment into the Chinese economy. What was different about this policy was that it was a gradual change and not a sudden change as experienced in other developing countries, which led to bankruptcies and high costs (Campbell and Lindberg 1991). This policy also placed emphasis on foreign capital policy, the foreign exchange system, and it also offered promising conditions for foreign investors (Galbraith, 2000). This policy has since reaped dividends given that the main mode for FDI into the Chinese economy has been through foreign-funded and joint venture companies. This has also been reflected in figures which show that between 1990 and 1996, China managed to attract approximately $230 billion of foreign capital, with 20% of that amount coming from developing nations (Galbraith, 2000). However, the open-door policy did more than just attract FDI to China; it also introduced the market for corporate control, which is where firms are sold and bought or are taken over (Groenewegen 2004). This market for corporate control previously did not exist, due to the high number of enterprises owned by the state, which also meant that no FDI was coming into the economy. By opening up the economy, most of these government enterprises have now been left open for mergers and acquisitions, due to market forces operating in the economy. For instance, this open-door policy led to initiatives from the Chinese government to reduce non-profitable enterprises (Groenewegen 2004), and between 1995 and 2002 the number of state-owned enterprises decreased by 46%, and profit increased by 163.6% (SASAC 2004). First of all these figures demonstrate that during that time period there was a record number of mergers and acquisitions and that these were probably due to the need to establish profitable organizations for the Chinese government. These figures also show that mergers and acquisitions have the ability to generate revenue through profits, which demonstrates that the news organizations are more efficient than they were in their previous state. This clearly suggests that the Chinese government experienced a lot of the advantages of mergers and acquisitions from the introduction of the market for corporate control; however one also has to consider the effect of this open-door policy on small private companies.
The move from a centrally planned economy to a market economy has also encouraged FDI as the government has had to make changes to tax systems, in order to make them more favorable to investors. Foreign investors are considered to introduce new technology, new methods, structures, processes, and management styles to the economy which result in increased productivity and revenue (Lupton 1994). It would also seem that these introductions into the economy also trigger mergers and acquisitions, as other organizations find cost-effective ways of obtaining these new technologies and methods.

...Download file to see next pages Read More
Cite this document
  • APA
  • MLA
  • CHICAGO
(“Merger and Acquisition in China Coursework Example | Topics and Well Written Essays - 7000 words”, n.d.)
Retrieved from https://studentshare.org/business/1523018-merger-and-acquisition-in-china
(Merger and Acquisition in China Coursework Example | Topics and Well Written Essays - 7000 Words)
https://studentshare.org/business/1523018-merger-and-acquisition-in-china.
“Merger and Acquisition in China Coursework Example | Topics and Well Written Essays - 7000 Words”, n.d. https://studentshare.org/business/1523018-merger-and-acquisition-in-china.
  • Cited: 0 times

CHECK THESE SAMPLES OF Merger and Acquisition in China

Cultural Integration in Cross-Border Mergers and Integration

138-142) identify four stages of the merger and acquisition process: 1.... Cultural Integration in Cross-border Mergers and Integration: Issues and Solutions Table of Contents Title page 1 Table of contents 2 The importance of M&A cross-border cultural integration 3 The stages of mergers and acquisitions 4 The motive behind the acquisition or merger 4 Due diligence and negotiation stages 5 Post acquisition integration stage 6 Integration of organizational culture in M&A 7 Cultural integration in cross-border M&A 8 Cross-cultural management in M&A 9 Localization strategy 10 Transplanting the culture of the parent company 10 Evasion tactics 10 Cultural innovation by integration 11 Issues in cultural integrations in M&As 11 Conclusion 13 Re… ferences 14 Cultural Integration in Cross-border Mergers and Integration: Issues and Solutions The importance of M&A cross-border cultural integration A merger or acquisition is often candidly described as a marriage of two organizations; in business, this would be between two enterprises....
12 Pages (3000 words) Coursework

How Does Government Regulation Affect the Success or Failure of Mergers and Acquisitions

The paper is specifically concerned with analysing current issues pertaining to government regulation of mergers and acquisitions in china in comparison to the other developed countries.... Case examples about the impacts of government regulation of mergers and acquisitions will be drawn from USA, Europe and china.... According to Jackson & Schuler (2000), in a merger, the two firms are supposedly on equal footing after they have been merged where one new company will continue to exist while in an acquisition, it is clear that one firm will take control of the other's resources....
11 Pages (2750 words) Coursework

Horizontal Integration

hellip; Irrespective of what industry a firm or business operates in, if it is on the same value chain of production, any merger or take-over would be termed as a conglomerate as this would be an example of diversification.... Similarly, if a manufacturing firm merges with another, not only this would be the merger of capital, assets, and liabilities, but also the firm would now share each other's competencies and specialties.... Coming back to the example of the retail store merger, the store would now be carrying more brands in all categories and hence, would be required to place bulkier orders to keep all the stores stocked....
9 Pages (2250 words) Coursework

Merger, Acquisition, and International Strategies

In addition, merger and acquisition process should be conducted in steps as earlier stated.... The driving principle in mergers and acquisition is to make investor value.... The process of merging and acquisition is vital deal whose signing determines the gains and profits of the merging corporations.... The acronym Alcoa was coined in 1910 because of a merger with another company, which later in 1999 adopted it as an official name in 2001; Alcoa went into an acquisition agreement with Aluminum Corporation of china (Chalco) buying from them 9% of their shares....
6 Pages (1500 words) Essay

Mergers and Acquisitions Strategy for Companies

Johnson & Johnsons acquisition of Synthes GmbH, Microsoft Corporations acquisition of Skype Technologies, china National Offshore Oil Corporation (CNOOC)s acquisition of Nexen Inc.... Mergers and acquisitions (M&As) have today emerged as an important strategy for companies to perform their operations in a competitive and proficient manner....
11 Pages (2750 words) Essay

Merger of HSBC and Oman International Bank

Based on liquidity ratio, market price per share, profitability ratio, and earnings per share it is seen that the banks were doing fine until the merger year.... However, since a slow growth and unsatisfying profits were registered, it is recommended that the company values its… In addition, the merger should consider the decrease in operations' costs as they affect the profitability ratio indicating signs of increased revenues with little net income.... The motive of this type of merger is to cut down on competition and maximize on factors that can improve the economic footing of both companies....
21 Pages (5250 words) Essay

Cultural Integration in Cross Border Mergers

hellip; A merger or acquisition is often candidly described as a marriage of two organizations; in business, this would be between two enterprises.... The researcher of this coursework "Cultural Integration in Cross Border Mergers" states that cross-border M&As, gain a special importance because they play a vital role in foreign direct investment, directly impacting upon the entry of additional equity in the host economy....
12 Pages (3000 words) Coursework

Judgement and Decision Making

There are several influences that could lead to the bias of acquisition decisions by the future.... The overall value of the company that is acquired at the time and the net effect that the acquisition of the company will have is a basis of making the decision.... The necessity to hold a partial perspective of the acquisition process is in the case of value informed by the major benefits in terms of value that the process holds....
12 Pages (3000 words) Research Paper
sponsored ads
We use cookies to create the best experience for you. Keep on browsing if you are OK with that, or find out how to manage cookies.
Contact Us