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Status of foreign mergers and acquisitions of listed companies in China and Countermeasures

Author: TanYanPing¡¡MeZuo From: www.yourpaper.net Posted: 2009-12-28 02:49:02 Read:
[Abstract] With the rapid expansion of the securities market in recent years, accelerated the reform of state-owned enterprises, foreign direct investment in the capital market to limit the release as well as the introduction of the QFII, through direct acquisitions for equity transactions in the stock market will continue to increase . This paper mainly analyzes the characteristics and potential problems at this stage foreign mergers and acquisitions of listed companies in China, and put forward policy recommendations on foreign mergers and acquisitions of listed companies. ª¤
[Keywords] foreign mergers and acquisitions of listed companies the potential risks

The so-called M & A, is the general term for the merger (Merger) and acquisition (Acquisition), refers to the role of the market mechanism, in order to obtain control over other enterprises and the property rights trading activities. Foreign investment is from the main aspects to be defined, refers to foreign investors, including overseas Chinese citizens return to mainland investors, investors in Hong Kong, Macao and Taiwan regions in China and in Hong Kong, Macao and Taiwan regions window run enterprise. Foreign M & A cross-border mergers and acquisitions, and mergers and acquisitions by foreign investors of domestic enterprises behavior from the perspective of the host country.

First, the characteristics of foreign mergers and acquisitions of listed companies in China
1. Mergers and acquisitions industry more widely, shift the focus of attention of foreign capital from manufacturing to transport, ports and other infrastructure industries and the banking, insurance, securities, financial services, consulting services field. Increasing the scope of foreign mergers and acquisitions, penetrate the deeper and deeper. Foreign investment the domestic interested in the industry including the huge potential domestic market of high-speed growth, low manufacturing costs in the country to have a certain brand enterprises. Multinational companies as strategic investors to participate in the equity restructuring of state-owned enterprises, favor those good market prospects, the core competitiveness of enterprises, technological backwardness, a heavy burden, market potential, it is difficult to become the object of foreign mergers and acquisitions.
2. Foreign mergers and acquisitions of listed companies tend to mergers and acquisitions of listed companies to issue B shares. A total of 110 B-share listed companies in Shanghai and Shenzhen, the main reason for foreign favor of such listed companies, on the one hand, B shares securities varieties is the only opening to the outside world, on the other hand, taking into account the presence of a large number of China's securities market is the state-owned shares legal person shares of non-tradable shares, which acquired a good choice to buy shares in the two markets, respectively.
Strategic acquisitions mostly, but do not rule out the vicious acquisition of the phenomenon. Prefer long-term cooperative behavior of foreign mergers and acquisitions, the aim is to get to the market in China, the other hand, hope to get a synergistic effect. The foreign investment company attaches great importance to the the object acquired conditions of the sales network and production facilities, and as key acquisitions in China.
4 M & payment innovation. This is a financial innovation of China promulgated the "Measures for the Administration of Acquisition of Listed Companies" and international standards. The law to break the Companies Act funding situation does not include equity, the historic proposed acquisitions paid in cash or securities as tools.

Second, foreign mergers and acquisitions of listed companies, the potential risks
China is currently in a period of important strategic transformation of the social and economic development, the establishment of a macro-control mechanism and improve the construction of the market system and micro-economic subjects such as shape is still being perfected, and foreign investment in China's large-scale M & A activity kicked off soon, in this case, some of the negative impact of foreign mergers and acquisitions may trigger can not be ignored, foreign mergers and acquisitions of listed companies may bring the following problem.
Likely to cause trade monopoly, the impact of national economic security. Foreign capital through the capital market, with the low-cost acquisition of Shell Resources, injected in business and technology, product, and occupation of the Chinese market in a short period of time, expand financing channels to market in-depth development and possession easily monopolize affect the country's economic security. Chinese enterprises and foreign-funded enterprises in the brand, capital, technology, management strength may be a difference too great, and our antitrust laws, regulations restrict the absence of accompanying the results of the competition can only foreign monopoly.
Adversely affect the optimization of the industrial structure in China. If there are no restrictions of the relevant laws and regulations allow foreign holding acquisition, then the number of good benefits, related to people's livelihood and the strategic significance of the enterprise will be controlled by foreign investors, and foreign investment aimed at for-profit, mergers and acquisitions of Chinese enterprises, will be the enterprises into its group to determine the type and yield of the company's products, in accordance with the overall interests of the Group, without considering the rationalization of the industrial structure in China. This leads to the development of the industry dominance transfer deviated from the goal of the development of the national economy, and eventually erode the foundation of the state-owned economy.
The decline of the national brand. Foreign mergers and acquisitions of listed companies could lead to a huge loss of national brands. Listed companies on the capital market generally has established a good brand image, is a valuable intangible assets of the enterprise. In the process of foreign mergers and acquisitions of state-owned enterprises, many state-owned enterprises in order to bring in capital and technology, not only to hand over control of the company to give way, and even low-cost or free of charge to sell the brand, business reputation, raw materials supply channels, product sales network invisible assets. Not only that, in mergers and acquisitions of state-owned enterprises, some foreign the China brand production capacity and sales channels, to launch its own brand, gradually reduce until you stop using the Chinese trademark; some Chinese trademark targeted at the low-end products, the China Trademark reputation and value will decrease.
Speculative M & A issues. Speculative M & A activity, including commonly referred to as "fried property rights, The" fried enterprise mergers and acquisitions of state-owned enterprises, corporate performance and foreign investors optimistic about the prospects for China's economic development, the controlling stake in listed overseas or resale. The harm that this acquisition does not bring a lot of money, technology, and generally holding is not involved in business management, but the trademark of the original Enterprise, reputation, market share, intangible assets and China's economic growth prospects speculation. Chinese enterprises lack the ability to identify acquisitions investment for speculative, speculative investment opportunities. Third, actively respond to foreign mergers and acquisitions policy recommendations
1. Strengthen the the legislation guiding role of industrial policy. Clear foreign capital to enter the industry and the field of industrial policy is the direct manifestation of the intent of the national macro-control of macroeconomic policy, foreign acquisitions of Chinese enterprises must comply with the requirements of China's national economic development strategies and national industrial policy. The face of large-scale foreign acquisitions of Chinese enterprises, we should be read in conjunction with industrial policy, and according to the characteristics of the industry and products, specify to prohibit, limit, and allowed the classification management, set the system conditions and the law to guide foreign investment mergers and acquisitions of state-owned enterprises.
2. Clear the proportion of foreign-funded, and improve the examination and approval system for foreign mergers and acquisitions. Recommended in China's foreign investment legislation, not only to clear foreign investment into industries and fields, but also to distinguish between different industries specified proportion of investment, specified the extent of foreign investment into Only in this way will it be beneficial to our specific grasp of foreign capital into the the extent to prevent or reduce the adverse effects of foreign mergers and acquisitions of state-owned enterprises in China, and the protection of China's economic autonomy and security. Universal review system for automatic approval system limited to change in accordance with the international practice, in order to improve the efficiency of the examination and approval of foreign investment, and to promote the introduction of foreign capital.
The establishment of the "anti-monopoly law," as the core M & A regulatory system. Sales in the field of production in some sectors, a foreign resident in the controlling position and even the formation of monopolies. Foreign investment by holding one of the leading enterprises so as to realize its trade monopoly, which has become one of the major strategies of foreign investment in China, and in practice due to the transfer of industry concession will form certain industries by foreign monopoly and this foreign monopoly situation in the next few years are likely to continue to intensify. In order to effectively regulate foreign mergers and acquisitions as well as the opposition has economic monopolies exist in reality, should the development of China's "anti-monopoly law," as soon as possible to limit and prevent the formation of monopolies. To this end, we should improve the existing Anti-Unfair Competition Law, and on this basis, and gradually establish and improve the reunification of our country's competition law systems. ª¤
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