M & a of China Automobile Industry

Topics: Automotive industry, Automobile industry in China, Automotive industry by country Pages: 9 (2762 words) Published: December 30, 2012

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

1 Introduction
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


regulations, associated guidelines are made which involve the acquirer and acquiree, such as the source of...

References: [1]. Stefano Rossiand Paolo Volpin.Cross-Country Determinants of Mergers and Acquisitions [M]. London Business School, 2002 [2]. Guo Jianhua. The global automotive industry changing situation report [R]. Beijing: Equality in Automobile Research Institute, 2009(in Chinese) [3]. RolandBerger Strategy Consultants. China 's auto industry development, in the current financial crisis the opportunities and challenges [R], 2009 (in Chinese) [4]. State Council Development Research Center of Industrial Economics Research Department, Society of Automotive Engineers of China, Volkswagen Group. China Automotive Industry Development Report [M]. Beijing: Social Sciences Academic Press, 2009.7 (in Chinese)
Continue Reading

Please join StudyMode to read the full document

You May Also Find These Documents Helpful

  • Automobile Industry China Essay
  • Essay about Automobile
  • Essay on Automobile Industry China
  • Automobile Industry, India Automobile Industry Essay
  • Automobile Industry Essay
  • Automobile Industry in China and India Essay
  • Macroeconomics of the Automobile Industry Essay
  • Automobile Industry in Oman Essay

Become a StudyMode Member

Sign Up - It's Free