What are the reasons why international enterprises adopt M&A for international direct investment?

1, the impact of economic globalization

Economic globalization is both an opportunity and a challenge for multinational companies. On the one hand, the developed countries with the most capital and their multinational companies are the biggest beneficiaries of current economic globalization. "The essence of economic globalization is an industrial deconstruction and adjustment carried out by developed capitalist countries on a global scale. This adjustment of capitalist industrial structure is a link to transfer some industries within developed capitalist countries. " (9) This transfer is achieved through foreign investment and mergers and acquisitions of multinational companies. On the other hand, economic globalization and world trade and investment liberalization have also brought about further intensification of market competition, and more and more countries and enterprises have the opportunity to directly participate in international market competition. Therefore, for multinational companies, the original market share and monopoly pattern will be challenged, and it is necessary to adjust the global operation and development strategy in time to achieve low-cost production and high-price sales worldwide and improve the global market share. Cross-border M&A is the way and means to achieve this goal. It can not only transfer resources, but also gain control of the target enterprise. Especially in the context of the accelerated process of world economic integration, cross-border M&A can also bypass various barriers to trade in goods and services between countries and occupy the market more effectively, becoming the most effective way for multinational companies to quickly occupy new markets.

As an important actor in the world economy, transnational corporations have a great influence on the development and future direction of the world economy, and the changes in their foreign investment methods will also bring great changes to the development of the world economy.

2. Cross-border M&A has certain advantages over cross-border creation.

Since the second half of 1970s, M&A model has begun to surpass creative model in transnational investment between developed countries. Relevant research shows that 54.8% of 180 American multinational companies with 3603 subsidiaries in industrialized countries were established through mergers and acquisitions; Of the 3,207 subsidiaries of 135 European and British multinational companies in industrialized countries, 53,438+0% were established through mergers and acquisitions. Although in the same period, the entry mode of multinational corporations in developing countries was still mainly creation, for example, among the 265,438+024 subsidiaries of American multinational corporations in developing countries, 57.6% were established through creation and 35.6% were established through mergers and acquisitions; Of the 65,438+0,454 subsidiaries of European multinational companies in developing countries, 49.2% were established through new construction, while only 32% were established through mergers and acquisitions. However, in the 1990s, the transnational investment patterns of developed countries to developing countries and between developing countries also changed substantially. According to the press release of the United Nations Conference on Trade and Development, the total cross-border investment of 1996 is $350 billion, of which the total investment flow through cross-border mergers and acquisitions is $275 billion, accounting for 79% of the total cross-border direct investment flow. In that year, the amount of foreign capital flowing into developing countries reached a record, reaching $654.38+0.29 billion. It can be inferred that even if nearly 100% of the capital flowing into developed countries is cross-border mergers and acquisitions, nearly 60% of the capital flowing into developing countries flows through mergers and acquisitions. By 2000, the proportion of transnational mergers and acquisitions in international direct investment has reached more than 80%.

The emergence of this trend is inseparable from the advantages of cross-border mergers and acquisitions over new enterprises, which are mainly reflected in:

First of all, we can bypass or lower the barriers to entering new industries. Enterprises entering a new industry and field will face many barriers, such as fierce resistance from existing enterprises; High relocation cost of new products; The original enterprise's control of sales channels, etc. Therefore, when enterprises are going to invest by creative method, they must fully consider all entry barriers. Using M&A to invest can greatly reduce the entry threshold, especially the direct acquisition of relatively mature similar enterprises, which can reduce the contradictions between the two parties in the process of joint venture and new construction to a certain extent; By merging listed companies to enter the capital market, we can avoid the time and cost of direct listing of foreign-funded enterprises and gain the advantages of low-cost entry, low-cost expansion and localized financing in the fastest way.

Second, it can reduce the risk and cost of enterprise development. For enterprises, creating investment not only involves the construction of new production capacity, but also needs to spend a lot of time and financial resources to obtain stable sources of raw materials, find suitable sales channels, and explore and compete for markets. So there are many uncertainties and risks in the way of creation. In the case of mergers and acquisitions, we can make use of the original enterprise's raw material sources, sales channels, market share, and even management systems, human resources, intangible assets, etc. , can greatly reduce the uncertainty in the development process, reduce risks and costs. Moreover, after the merger of competitors, the number of competitors in the market has also decreased accordingly, which is very beneficial to win a larger market share.

Third, it can quickly enter the mainframe market, occupy market share and shorten the construction or investment cycle of the project. One of the main motives of transnational corporations' foreign direct investment is to quickly occupy the host market, and M&A is the fastest way, because it can effectively use the existing related resources of the merged enterprises to cope with the intensification of competition and the shortening of product life cycle, which is difficult to obtain under the creative mode. Especially for the manufacturing industry, the biggest advantage of adopting M&A is that it can save the time of building factories, quickly obtain ready-made production factors and establish foreign production and marketing bases. However, the establishment is much slower. Besides organizing the necessary resources, it also involves a series of complicated tasks, such as site selection, plant construction and equipment installation, arrangement of managers, technicians and workers, and formulation of business strategies of enterprises. Therefore, when quickly entering the host country market becomes the main target of multinational companies' investment, M&A will inevitably become the best choice.

It is these advantages that make M&A investment gradually replace creative investment and become the main choice for foreign direct investment of many multinational companies in recent years.