The Researches on Overseas Mergers and Acquisitions of China Automobile Industry in Post-Crisis Period∗ ZHU Qin School of Economics, Zhejiang Gongshang University, P.R.China, 310018 Zhuqin9871@163.com Abstract: Since the 2008 financial crisis, the overseas mergers and acquisitions (M&A) of China automobile industry have become a topic the world's automobile market most concerns about. This paper views that the rapid growth of the domestic automobile market, the adjustments in overseas auto industry and much support from government’s policies provide a good background and favorable conditions to overseas M&A of China automobile industry. It also points out that although China's state-owned enterprises are still the main body of overseas mergers and acquisitions of China auto industry, private enterprises are playing an increasingly important role. Through studying specific cases, the paper proposes countermeasures concerning overseas mergers and acquisitions of China automobile industry in post-crisis period. Keywords: Post-crisis period, the automobile industry, overseas mergers and acquisitions
The rapid growth of China’s economy since the reform and opening, the explosive increase of automobile industry in recent years and government’s supporting policies on the automobile industry altogether offer new opportunities and conditions to overseas M&A of China automobile industry. At present, China has become the largest automobile producer in the global. In 2009, the top ten automobile manufacturing countries were: China (13791000), Japan (7.935 million), United States (5.697 million), Germany (5.206 million ), Korea (3.513 million), Brazil (3.183 million), India (2.628 million), Spain (2.17 million), France (1.935 million), Mexico (1.561 million). Large-scale production capacity endows China auto companies with a base to expand overseas. Following the 2008 financial crisis, the global economic downturn has had the international Automotive Group faced with overcapacity problem; meanwhile, the global credit shortage has brought great pressure to the survival and development of the automobile business. Funding gaps emerged in many international auto giants. After the financial crisis, the asset value of many foreign enterprises is seriously underestimated, which gives a good chance for Chinese enterprises to take a shot. Through overseas M&A access to the dreaming international auto brands, the core technology and international marketing channels can be acquired at low costs. At the same time, Chinese auto companies have sufficient capital reserves at the present stage, and with the strong support from the government and national financial institutions, there is a potential for them to become competitive buyers for part of the international Automotive Group's quality assets. It is worth mentioning that related departments in the Chinese government treat the auto industry as a pillar industry of national economy, giving it much positive policy support. "The automotive industry restructuring and rejuvenation program", promulgated in 2009 increased efforts to support the automobile industry. First, the program states that “it is required to promote the restructuring of the automotive industry, to support M&A of large-scale automobile enterprise groups, to expand the scale of major auto parts enterprises through M&A." Previously, the major auto companies were not willing to conduct cross-regional restructuring because of too many barriers. "The automotive industry restructuring and rejuvenation program" can effectively solve this kind of concerns. In related detailed ∗
[Sustentation Fund]: National Science Fund of China (70703030) , Zhejiang Province Science Fund (Y6080222), Humanity and Social Science Fund of Chinese Ministry of Education (07JA790083, 09YJC790240) 43
M & D FORUM
regulations, associated guidelines are made which involve the acquirer and acquiree, such as the source of...