On the oversea Merger and Acquisition of China CompanyOn the oversea Merger and Acquisition of China Company
The global economic integration and global economic liberalization has promoted the fast growth of international merger & acquisition (M&A). With the deep development of global economy, M&A is booming like rising wind and scudding cloud, which has became one of the most important impetus of foreign direct investment (FDI) theories and global economic development. Therefore, comprehensive analyses of relevant theories and practices as well as relevant summaries of experience and lessons in these activities are of big significance. Especially in China, all of those will do much favor in the aspect of improving Chinese enterprises’ proficiency in the worldwide competition. Despite of some limitations, the features of this dissertation can be summarized as follows:
On the basis of related theories of international M;A, this paper chooses some innovative but important problems in oversea M;A activities such as financial strategic issues, financial risks and performance appraisal, which are rarely covered in existing literatures on this subject.
The study on the financial problems of Chinese oversea M;A is closely according to both successful and failed cases of Chinese enterprises which show a scientific attitude of this dissertation towards this subject. This dissertation has filled in some blank arrears in this subject and hence it has preferable value to helping Chinese enterprises to improve multinational operation and build up global competitiveness in the world.
Stigler G. J. (1993) has conducted an investigation on the American large enterprises and pointed out that almost all the large enterprises researched were beneficial from the manner of M;A to some extent and almost all the American large enterprises did not depend mainly on internal expansion to make a difference. Despite the American large enterprises, historically speaking, the development of all the international enterprises across the world had demonstrated this argument and in some degree the history of international enterprises is the history of international M;A. So far there have existed five significant M;A waves in the history since 1870s.
The first one occurred in 1870s and the period from 1898 to 1903 was the highlight of it. The first one was focused on the M;A in homogeneous industries which was actually horizontal M;A.
The second one, on the contrary, was vertical which happened among enterprises of different levels in homogeneous industry. It existed from about 1916 to 1929. Moreover monopolies also appeared in several industries during the second period.
From 1950s to the end of 1960s, the third M;A stream happened and it featured M;A diversification among different industries rather than homogeneous industry.
From the middle of 1970s to 1980s, it was the time of the fourth one and it was characteristic of hostile takeover and leverage buyout through wide use of financial instrument.
With the fast development of globalization, investment liberalization, international trade liberalization and capital market integration, a new highlight happened from the middle of 1990s till now. Compared with the former ones, the latest has many special characteristics.
Firstly the scale of it is rather large. From the year of 1990 to the year of 2004, the number of M;A cases across the world has increased from 9000 to 20000 and the money used in relevant fields of M;A has also rose from 290 billion dollars to 1844 billion dollars. According the data from Dealogic which serves as the supplier of global financial data, the total money spend on M;A across the world in 2005 reached 2900 billion dollars which increased by 40% compared with that in 2004 and ranked number one during the period from the year of 2000 till now. Moreover, the money spent on single M;A case has also reached the top of its history. For example, in 2000 American Online purchased Time Warner at the cost of 155 billion dollars. In 1999, Pfizer spent 82.4 billion dollar on the purchase of Warner-Lambert. Exxon took over Mobil at the cost of 8.14 billion dollar in 1998.
Then the second characteristic is that the horizontal type of M;A captures the predominant position. Most of the existing M;A events have adopted horizontal manner, namely M;A among homogeneous industry and took place on a large scale. Furthermore, these M;A events have promoted the birth of the largest oil company, the largest financial organisation and the largest electronic communication corporation across the world.
Then another characteristic is that M;A is covering more and more industries. The fifth stream not only included emerging industries’ takeovers of traditional industries but also could be seen in some fields with highly dense technology and capital, such as private care market, financial service, air transportation, oil market and voyage facilities market. International M&A has covered those fields frequently. In addition, the electronic communication industry covered one third of the contemporary total M&A activities in the year of 2000.
Then the M&A within emerging industries showed most active and successful. To emerging industry, the technological innovation and development play a crucial role in their survival and sustainability. However, the life cycle of products has decreased much; additionally the risk and cost in the innovation of advanced technologies have increased. In order to obtain new technologies and capture new market share quickly, many enterprises chose the manner of takeover, because its advantages of saving much money spend on development and trade. Moreover this manner also can overcome the shortcoming of incompletion of middle product market and quickly benefit from the products through the expansion of market scale.
The last characteristic is the change in the frequency of takeover across the world. Unlike previous time, takeover seemed to be more active in the developing countries rather than in the developed countries. In developed countries this action shows a tendency to decrease while in developing countries it is more and more active. In China the fact that many multinational enterprises take over local ones is not fresh and some excellent enterprises born under the context of opening policy also begin to take over foreign ones.
With the help of the strategic policy of opening, Chinese economy received a rapid development and many enterprises began keeping their eyes on outer markets and showed a great interest in entering foreign countries. Since the entry into WTO, with the hope of developing them and gaining global competitive advantages through oversea M&A activities, a growing number of Chinese enterprises treated M&A as the main manner to conduct foreign direct investment. For example, CNOOC has taken over Unocal, PetrolChina has taken over the PK Petrol Company, TCL purchased the color TV operation of Thomson and Lenovo Company has taken over the PC (private computer) department of IBM. According to data released by Chinese Ministry of Commerce in 2005, there were more than 100 enterprises applied the manner of M&A and the money invested in oversea takeover increased fast by the range of 70% in the passed 4 years. Oversea M&A has become the most popular way for Chinese enterprises to realize their “going out” strategy. Oversea takeover covered 54.7% of the total foreign direct investment in 2004. From accurate data, the money used in purchase of foreign companies has increased by 50% in China in the year of 2003, which has reached 7 billion dollars.
In general, Chinese enterprises’ oversea M;A activities all possess a clear strategic and planned intention, aiming at improving their competitive advantages in both the domestic and global market as well as getting different rare and useful resources. Nevertheless, Chinese enterprises’ M&A strategies are always confronted with a lot trouble. Some received a little achievement while some had to stop in the half way and another even was bogged down in the risk of high loss. The reasons are various but the main ones are the following two aspects. On the one hand, there existed a great gap between Chinese capital market and international capital market, which resulted in the difficulty of financing in oversea takeover. On the other hand, they put all of their energies in the overall strategic objectives while overlook explicit financial designs and detailed plans. Moreover, the lack of professional experts in international M&A and skills in financing, the lack of analyses and precaution against the financial risks during the M&A process and the lack of ability to improve performance and gain benefits are also serious barriers in the way of Chinese enterprise’s oversea M;A.
1.2The research aims and objectives
Facing serious situations, most Chinese enterprises are still unaware of their own situations in the world, and could not clearly design their financial strategies as well as relevant financial requirements. The consideration of relevant payment ways and financing channels are usually set away. Then Chinese enterprises lack an overall assessment about all kinds of risks and prepare no effective measures, which usually result in the financial problems, loss and bankrupt not speak to realize the previous strategic intentions. In addition, they have not achieved an effective way of performance appraisal
These all are the key barriers in the way of Chinese enterprises’ oversea M&A and these also are the objectives that this dissertation will be focused on. From the above mentioned introduction of Chinese background, Chinese enterprises’ oversea M;A was mainly prevented by financial problems. For one thing, the domestic financial market lacks complete financing channels which made those enterprises have to face serious capital problems. For another, the lack of professionals in the field of international financial management, vague strategies and poor skills all have limited the performance of Chinese M;A practices. Do Chinese enterprises have no hope to conduct successful M;A? How can they manage to overcome their financial barriers? This dissertation chooses the financial perspective and explores the financial problems in Chinese enterprises’ M&A so as to demonstrate that it is feasible for Chinese enterprises to conduct successful M&A. In addition, this dissertation also makes detailed suggestions for them.
Recently, the research on oversea M&A in China from the financial standpoint is still a new field which few have stepped in. However, the study of them has several practical and academic values. This dissertation will analyze these financial problems and hence help Chinese enterprises to make clear their own positions in the world and provide helpful experience and constructive advice in order to promote the further development of Chinese enterprises’ M;A. moreover, this dissertation is also aimed to fill in the academic blanks in Chinese research on this field and offer some useful references for the subsequent scholars.
2. Literature review
2.1The definition and type of oversea Merger and Acquisition
Oversea Merger and Acquisition is the strategic behaviors to adjust the borders and scale of enterprises, which can improve the core competitiveness and improve the sustainable profitability. Oversea Merger and Acquisition can divide into three types, that is to say, horizontal merger and acquisition, vertical mergers and acquisitions, and mixed mergers and acquisitions. The horizontal merger is engaged in similar business merger between the two companies in order to enhance economies of scale and market share. The vertical mergers refer to the merger and acquisition activity of expand the company’s merger and acquisition prior to or after the merger-related. Mixed merger is the merger and acquisition activity engaged in business activities related to the type of business.
2.2The oversea Merger and Acquisition theory
2.2.1 Motivation theory
The forces of M&A will vary from case to case. However, from the existing researches, organizations may conduct M&A based on the forces of efficiency, market advantage, descent in trade cost and other factors. Before the descriptions of the following theories, the author identified A Company as the subject that will take over others in the M&A and B Company as the object which will be taken over by A.
(1) Efficiency theory
Western scholars received more achievements than Chinese scholars in this field. Weston and other western scholars claimed that corporate M&A and replacement of social asset will not only bring potential benefits for the whole society but also result in improvement of efficiency for both the two sides in a deal. Briefly speaking, this theory concludes five secondary theories:
The first one is called the theory of synergistic effect on management and it is the incomes arising from increase in efficiency of management through corporate M&A activities. This theory proved a positive phenomenon that the improvement in managerial efficiency will bring a growth of corporate profits. This phenomenon can always be seen in the horizontal M&A practice. Because the management of resources requires cooperation of certain group and a special managerial method can only perform in a special industry, the synergistic effect will occur when adding the surplus managerial resources of A company to B company whose efficiency of resources organization is relatively low. Lewellen, Loderer & Rosenfeld (1985) concluded that there existed a positive relationship between the profits gained by M&A and enterprises’ managerial capacities. This finding supported this theory from other angles and makes this theory more telling.
The theory of synergistic effect on operation is the second one. This theory believed that M;A can bring changes in efficiency of operation and the improvement of efficiency will also result in a series of benefits, especially the scale benefit and scope benefit. Unlike the theory of synergistic effect on management, such effect is prevailing on manufactures adopted vertical M;A method. Because manufactures have all kinds of products, the complementary cooperation will create synergistic effects. In addition, owing to taking over several complementary resources from the rivals like the market shares, brands and technologies, synergistic effect on operation will also be likely to happen.
The third is theory of synergistic effect on finance. This theory convinced that M;A will bring many financial benefits for enterprises. These benefits did always derive from interaction among inherent rules of tax law, accounting treatments practices and securities and this effect usually occurs in the form of pure economic benefits. Myers and Majluf (1984) believed that the financing cost will descend through change the outer financing into inner financing within the field of an enterprise and this way will enhance the synergistic effects on finance and reduce the risks of financing.
Next is about diversification theory. It believes that corporate M;A is likely to be caused by the diversification of organizational leaderships’ and other personnel’s requirements. Since the organizational leaderships and other personnel can not distract their risks through the capital market like corporate shareholders, they can only turn to diverse kinds of operation in order to increase the benefits of their companies. According to several researches, the diversification of operation in some degree will be doomed to bring about an improvement in corporate performance while an increase in excess will lead to descent in the performance. Generally speaking, diversification can be realized through both M;A and inner development. However, under the context that lacks necessary resources and that industry requirements are saturated, the M;A is a wiser method to capture positive opportunities to realize diversification. Therefore, M;A forced by this factor can exist at any time.
The last one is underassessment of true value theory. This theory believes that the happening of M;A is based on the reason that A Company recognized the market prices of B Company was lower than B’s inherent true value. This phenomenon may arise from the following aspects. Firstly, the B Company has not fully developed its own potential. Then maybe the A company has obtained some inner information on B’s inherent true value which is not released in public. At last, it may be caused by difference between market price and cost replacement which because of factors like inflation. Tobin J identified the ratio of them as Q-Ratio namely the ratio between stock price and replace cost. When the Q-Ratio of B Company is higher than one, the possibility of M;A is lower. Otherwise the possibility of being taken over is higher.
(2) Market power theory
This theory treats the market share as the most significant force of corporate M;A. Through the horizontal or vertical M;A, the market shares and competitive advantages of enterprises will be enhanced to obtain higher profits. Generally speaking, M;A pursuing market power is always horizontal and prevailing on the industries shared the similar technology, skill, products or distribution channels. When an enterprise wants to enhance its productive capacity and sale, the horizontal M;A is rather an advisable choice.
(3) Lower transaction cost theory
In order to conduct transactions, one must seek for the certain objectives, and then negotiate, contract, and carry on contracts and so on. However, these activities always need much expense. Therefore, when the cost of transaction is much too high, the enterprises have the deep motivation to limit the transaction within the organisation through vertical M;A so as to reduce the expense of transaction. Therefore, they insist that the saving of cost is also an obvious factor to some extent.
(4) Other motivations theory
Despite above-mentioned apparent factors, there are several other inherent or hidden elements that have an impact on the decision of corporate M;A, such as Managers’ benefit theory
Managers’ benefit theory believes that the occurrence of corporate M;A is actually due to the leaderships’ own contemplation on their benefits. Since the existence of principal-agent problem, the objectives of leaderships and stockholders may be not identical. Leaderships usually pay more attention to their own authorities, income, reputation and the stability of their positions and the surrogate rights of corporate managers are derived from the entrusting of stockholders, then the problems come along. With the bigger and bigger business scale, leaderships have stronger and stronger desire to pursue high increase in stipend, allowance and status. Therefore, leaderships are more interested in increase the corporate growth rate rather than profit rate. Compared with the stockholders, they own an inherent ambition to enlarge the corporate business scale and they are always biding their time to expand enterprises scale through M&A.
Idle cash theory. Idle cash refers to the surplus amount of money after meeting the requirements of all the invested projects. The conflicts in the placement of idle cash between stockholders and managers will create surrogate capital and lead to M&A. On the one hand, when the cost of surrogate is too high, in order to reduce the cost, M&A practice is likely to occur. On the other hand, the practice of M&A can also bring much too high cost of surrogate, because managers can take over other enterprises with the idle cash.
2.2.2 the integration theory of the oversea Merger and Acquisition
(1) capital market Concept
(2) strategic management concept
(3)Organizational Behavior Concept
(4) process concept
2.2.3 Foreign direct investment (FDI) theory
Recently, FDI theory captures a dominant position among many theories about international direct investment. Since 1980s, in order to adjust to new economic development tendencies and meet new economic requirements, FDI theory invaded into developing countries and treated the direct investment practices there as the new research objectives. Based on the study in developing countries, the FDI theory achieved some modification and expansion.
(1) Traditional prevailing FDI theory
The traditional theories embraced many kinds of factions and this part will choose those having important impacts and reputation to explore. Generally speaking, the traditional prevailing FDI theory involves monopoly advantage theory, inner integration theory, OIL (ownership advantage, internal integration advantage and location advantage), product life cycle theory and marginal industry theory. Furthermore, these traditional prevailing FDI theories can always be seen in the western countries rather than developing countries.
Monopoly advantage theory was created by an American scholar called as Stephen H. Hymer in the year of 1960 and then this theory received much modification and completion from C. P. Kindlerberg. This theory believes that the inherent imperfection of market like independent products market, factor market, economy of scale and trade barriers becomes the decisive factors of corporate choice of international M&A. However, when an enterprise wants to conduct foreign direct investment, it must equip itself with at least two basic requirements. On the one hand, it must possess the capacities of monopoly with a view to achieve more advantages in the competition in the host country namely the invested country. On the other hand, the imperfection should exist there, because it can help enterprises to maintain the advantages of monopoly.
In the year of 1973, Ronald H. Coase proposed inner integration theory in terms of corporate origin and balanced scale and Peter J. Buckley and Mark C. Casson applied his theory to explain relevant phenomena of FDI. This theory puts emphases on the importance of inner organization system and information transmission network and suggests enterprise should take advantages of them to realize international transformation within the organization, because of reduced cost and improvement of competitive advantages.
OIL (ownership advantage, internal integration advantage and location advantage) model was firstly mentioned by a British professor called John H. Dunning in 1976, who invented the compromise theory of international production. Then after his endeavors of systematic interpretation and development of it, this theory has become the most reputed framework of FDI. This theory is mainly involved with three arguments, ownership advantage, inner integration advantage and location advantage. Only when all of the three aspects are met, according to this theory, can an enterprise have the ability to conduct foreign direct investment.
Product life cycle theory: Raymond Vernon, the professor of Harford applied the comparative advantages in the analyses of American enterprises’ FDI behaviors. He demonstrated that the FDI behavior of manufactures has a close relationship with the product life cycle. The theory believes that the FDI behavior of corporations are actually the reflections to various features of three different phases of product life cycle, namely innovation phase, maturity phase and standardizing phase. In 1974, Vernon introduced the concept of “international oligopolistic behavior” in and redefined the three phases of product life cycle as the phases of autarchy based on innovation, maturity or formed autarchy and out-of-date or rigid autarchy.
Marginal industry theory: Japanese professor Kojiama K created a new model named after his name. He chooses the Japanese foreign investment behaviors after the second World War as the research objectives to analyze FDI theory, which is considered an innovation in this academic field. He considered there was a complementary relationship between international trade and international investment. International trade is conducted based on the comparative capital advantages while FDI begins at the inferior industries and hence it is possible to enlarge the comparative capital advantages of both of them.
(2) FDI theory in developing countries
The invading of FDI behaviors into developing countries began at 1980s and they achieved a rapid development during these years. The active behaviors of enterprises in developing countries attracted a wide attention from the world. Though the FDI theory in developing countries experienced a shorter history of development, it was comprised of 4 secondary arguments.
Small scale of technology theory: Wells, a famous American economist, proposed this theory. He testified the feasible manners of FDI for enterprises of developing countries based on the existing principles of comparative advantage theories. Moreover the comparative advantage here mainly refers to low cost advantages in relation with the special characteristics of market in developing countries. Wells also believed that the FDI behavior of multinationals of developing countries was actually performing their advantages of low capital.
Technology localization theory: British economist Lall S pointed out the core of this theory is that enterprises in developing countries can form and develop their special advantages to conduct FDI through application or improvement of mature technologies and skills. Lall believed that enterprises in developing countries can modify and improve mature skills as their own special competitive advantages in international environment. Through the localization of technologies, enterprises in developing countries can not only quickly and appropriately adjust to the prices requirements and product quality requirements there but also product more suitable goods coinciding with the special market requirements and consumers’ tastes there. Moreover it can also help to develop many diverse goods different from existing famous brands. Furthermore, if combining these technological advantages with domestic labor of low price, large familial enterprises or national enterprises, the other advantages in the fields of finance, management and so on are also formed at the same time.
Investment development path theory: Dunning is the creator of this argument and it is always considered as the extent and expansion of OIL model. The fundamental thoughts of this theory is that the economic development conditions and level will greatly influence the realization of domestic corporate ownerships advantages and inner integration advantages as well as its position advantages. Therefore, the economic conditions and developing level of one certain country determined the status and situations of its enterprises’ FDI. He divided the economic level into four phases according to individual GDP in each country and analyzed the characteristics of different stages. The first stage is the period that individual GDP is less than 400 dollars and few countries conduct FDI because of lack of ownerships advantages in production. If the individual GDP of a country keeps among 400 dollars and 1500 dollars, it has entered into the second phase. In this phase, the FDI is relatively more than the first one since countries in this period will attract more foreign capital. However, the FDI is still limited by their low economic development level. In the third phase, individual GDP keeps between 2000 dollars and 4750 dollars and the FDI increases too much extent. In this period the development speed of FDI may be quicker than the inflow of foreign capital. The last phase is always monopolized by developed countries and individual GDP has increased beyond 4750 dollars. In this phase, developed countries possessed huge ownerships advantages and have a growing FDI. To developing countries, according to this theory, the appearance of FDI is due to their continually growing ownerships advantages. The difference between developing and developed countries is determined by their own special ownership advantages and inner integration advantages.
Unbalance in foreign investment theory: this argument was proposed by Thomas W. Roehl in the year of 2001. Roehl demonstrated the importance of FDI during the forming process of corporate competitive advantages from the perspective of balance of corporate asset. This theory suggests that those enterprises with relative unbalance of assets like the lack of technological advantages and the lack of ability to scaled economic benefits should adopt the manner of FDI to gain the compensative assets in the foreign markets and hence to balance its corporate assets, greatly improve competitive abilities and fundamentally enhance its strategic situation. Therefore, FDI is an effective way for inferior enterprises in developing countries to enhance their competitive power and catch up with others.
This paper is used the positivism research philosophy. To master the research philosophy can help the researcher have better understanding how choose the research methods to be implementing in the project, so the whole research strategy is clarified. And a better understand of the research philosophy enable us better creative idea in either selection or adaptation of methods which is outside the researchers experience.
There are two distinctive research methods, that is, qualitative and quantitative research methods. The former focuses on the study in which the information that is gathered is done so in a descriptive method. The second method is the quantitative research method. This study will try to incorporate all the needed information and thus will combine both the qualitative and quantitative research method. While the research will be using statistical means for the interpretation of the data, descriptive assessment will also be combined to give the researcher more insight concerning the oversea Merger and Acquisition of China Company.
3.3Data Collection Design
3.3.1 Secondary data design
The researcher first identified the scope of the literature, and then searched the information targeted. The sources and the time of the information can be limited for collecting the valuable and the typically significant information, Chinese and foreign languages included. The materials come from the academic achievement at home and abroad, such as the academic works related and the journal papers. The data base of Academic Research Library of Proudest Company and the sites (www.emeraldinsight.com ) are also used to search for the available things.The researcher inspected and studied the related books and papers carefully, through the library information network and the search engine to guarantee the reliability and validity of the information.Due to the difficulty in obtaining the quantities information, quality information was used in this research. The literature cited in the study, as well as the legal provisions possibly to be used will be marked with the author, provenance, and the date of the publication or the promulgation. The validity and reliability of the data to be used for research were ensured by the author.This project at least needs five or six weeks to be completed. In the first week, the author gathered useful data and literature, discussed with supervisor for main directions and then completed literature review, first draft and final version in the time order.
3.3.2 Primary data design
For the dissertation is supposed to use the cases of Lenovo and TCL. The author interviewed with senior mangers and staff in both of them and their competitors as well as some authorized experts in this field to gain more accurate information. The following is about some selected opinions of them:
Liu chuan zhi, former President of Lenovo hold it that one crucial factor of this acquisition is that IBM is anxious to set apart its PCD and sell it to Lenovo. And because of this factor, the acquisition is not likely to be replicated.
Yang Yuan qing, the present of Lenovo, believes that cooperation of Lenovo and IBM should comprise brand, scale and efficiency.
Ward, former IBM PCD president, the incumbent CEO of the new Lenovo, comments that Lenovo and IBM can compliment each other in the intercontinental markets on the basis of IBM’s market network
One of the employees from the former Lenovo also considers the acquisition as a positive move with high risk and hopes that it will turn out to a success
One of the employees from former IBM’s PCD is not optimistic about this acquisition and the doubts whether Lenovo is competent of acquiring IBM’s PCD and whether Lenovo is able to fairly pay the staff of IBM’s PCD, many of whom are thinking of switching jobs.
One of the distributors of Lenovo takes the acquisition as a positive thing for Lenovo’s channels for it will provide Lenovo with more channels as well as deduce Lenovo’s competitors. Meanwhile, both Lenovo and IBM have to acquaint themselves with each other’s channels.
Dell is the one of the main competitors of Lenovo in Chinese market. The president of Dell forecasts that Lenovo’s acquisition of IBM’s PCD is not likely to achieve success since most cases of acquisition in the PC industry ended up with failure
Sunqiufang, Marketing Director of AMD, China, states that since both Lenovo and IBM are clients of AMD the acquisition will promote, instead of hampering, cooperation between AMD and Lenovo.
To sum up, insiders and distributors are optimistic towards the acquisition while competitors hold pessimistic view about it, employees diverge in this issue and suppliers make a few remarks while perspectives of professional experts from academics are more or less optimistic.
Philippe de Marcillac, vice president of IDC’s international business views that Lenovo acquired IBM’s PCD in a perfect time
Timothy Bresnahan, economist from Stanford University considers the acquisition as a inspiring phenomenon when Sino-American relations become increasingly complex
Chenmingjian, CEO of The East High St. comments that this acquisition is the landmark signifying that Chinese enterprises establish themselves in the global IT industry
The CEO of TCL, Dongsheng Li, said that this period is the most difficult stage in the history of TCL Barron. a famous German economic analyst said, Schineider Electric taken over by TCL has a preserving social image which was considered less advanced than TCL in public. The impulse of quick entry into oversea market and the fetishism of foreign famous brands made TCL spend little time on professional and deliberate examinations, which are doomed to result in lost.
3.4Limitations and further study
Considering the limitation of the time and the accessible academic resources, it is a not-so-perfect dissertation to express the author’s thinking and research works. If there are more enough time and investigation and analysis, there will be a more perfect one.The author knows clearly that the problem that Chinese enterprises face both in the integration process and more importantly, after the integration, is complex and challenging. Chinese oversea M;A activities at present are inclined to fail. The reason leading to the failure is interesting and valuable. From western M;A, Chinese enterprises can learn many things to promote their acquisition more effectively and economically. In the context of fierce industrial competition, how to respond properly to the competitors’ market activities is also a problem which in this paper is not enough described. In addition, the problems occurring in the process of performance appraisal are also not involved because the lack of necessary materials.The feasibility for Chinese enterprises to conduct oversea M&A activities has been proved true and relevant recommendations are also given. However, they are too simple and summarized and academic, further study should pay more attention on the appraisal of these measures. One aim of the system engineering is to study how one organization to suit the uncertain external circumstance by means of adjusting its own objectives and products strategies. For example, in terms of the case of Lenovo, in an atmosphere which stresses the collectivism, how to integrate the Research and Development and Engineering power of IBM PCD and not loss its creativity and inspiration and technology-oriented culture is one of the most important challenges. The low-end brand image Lenovo possesses also needs profound internal changes and revolutions, which needs a comprehensive solution. In this dissertation, there are more assessment and analysis of the acquisition than a clear responding strategy, even if the assessment and analysis is the basis of further works. So the further work the author thinks should contain the following four aspects: a comprehensive comparison and learning of different M&A cases; a proper response mechanism to the progressive and ambitious market activities; a proper integration of different culture and thinking; how to establish a high-end brand image using comprehensive methods such as the ads, the cooperation with the sports activities. In conclusion, the further work can focus on the formation and implementation of a clear and comprehensive acquisition strategy.
4. findings and discussion
4.1case study :overseas M & A of TCL Group
4.1.1 brief introduction of TCL Group
4.1.2 overseas M & A Events of TCL Group
4.2overseas M & A of color TV of TCL Group
4.2.1 industry background
4.2.2 overseas Mergers and acquisitions of Schneider
22.214.171.124 brief introduction of transactions each other
126.96.36.199 M & A process of TCL Schneider
188.8.131.52 motives analysis of TCL M & A Schneider
184.108.40.206 findings and discussion on the TCL Schneider merger
(1)The feasibility of oversea M&A for TCL Schneider merger
Analyses from the angle of motivation theory
Analyses from the angle of FDI theory
(2) Financial strategic problems in oversea M&A activities
Basic knowledge of financial strategy
Typical findings in China
(3)Chinese enterprises’ financial strategic problems in oversea M;A activities
Financial environment of oversea M;A
Financial strategies of oversea M;A
(4) problems of TCL M ; A Schneider
The selection of B (the objective in M;A) is inappropriate
The price is unreasonable
Lack the ability to control the financial risks
Much trouble in integration after M;A
Lack of the assist of professional intermediaries
(5)Risks of M;A
Analyses of Chinese enterprises’ M&A risks
Chapter 5: Conclusion and Recommendation
5.1 Overseas M & A strategic choice
5.2 Partner Selection
5.3 The target company’s assets assessment
5.4 Overseas M ; A low-key strategy
5.5 Overseas M ; A Cultural Integration