Internationalization In China Case Study

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3. Stage three: 2001 – present – The acceleration of overseas expansion activities in the form of mergers and acquisitions. It is said to believe that such an acceleration of internationalization can be partly explained by the perceived thought of foreign competition in China after China’s entry to the WTO in 2001. In 2004 alone, Chinese firms entered into 13 cross-border M&As, including Huawei. The approach of the Chinese authorities in relation to the internationalization of Chinese enterprises has drastically changed over time. Prior to the mid-1980s the Chinese government dedicated little attention to the development potential of Chinese enterprises. Reasons for this can be associated to SOE reform and government’s interest on developing…show more content…
The first wave lasted around a decade and focused on offshore investment. The second took place during the 1996-1999 period and was distracted by Hong Kong’s return to China; enterprises started shifting their attention to overseas expansion. Beginning in 2000, the third M&A wave brought domestic expansion and Chinese companies entered in joint ventures buying their foreign partner’s share. Since most of these joint venture contracts expired at that time. BCG goes onto suggest that the last wave of M&As (post WTO entry – December 2001) is strongly a result of China’s need for natural resources. For example, mining and energy are sectors of national strategic importance given China’s rapid economic growth. Therefore, government is keen to develop China’s resource allocation through the acquisition of foreign companies engaged in these…show more content…
Mergers and acquisitions now take up the main form of China’s outward investment. The value of cross-border M&As experienced a 17-fold increase between the years 1990 and 2002, jumping from $60 million to $1.04 billion (MOFCOM, 2005). In order to achieve key strategic assets, acquisition has been increasingly used, as evidenced in high profile deals such as Huawei’s purchase of IBM PC business in 2004 and Haier's unsuccessful bid for Maytag in 2006 (Fan 2008: 356). The major driving force behind these mergers and acquisitions is the Chinese government. Many of China’s renowned firms are SOEs that are guided by government policy. The Chinese government develops a selective support strategy and particularly encourages 22 strong companies to engage in outward FDI. The primary goal of this action is to develop the chosen firms into globally competitive multi-nationals, either by joining the ranks of the Global 500 or by building international brands (Deng 2007:

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