CHINA’S OUTBOUND MERGERS AND ACQUISITIONS IN THE U.S.

Abstract

Although scholars have long studied the acquisition by American firms of Chinese firms in China, surprisingly little research has been undertaken about Chinese firms acquiring American firms in the U.S. The significance of Chinese outbound M&A deals in the U.S. lies in its demonstration that no all-encompassing, reductive theory can apply to all M&A deals. This is because in each M&A deal considerations vary widely, and these variations are the result of different acquiring firms, target firms, and jurisdictions. China’s outbound M&A deals in the U.S. illustrate this point well for two reasons. Firstly, most cross-border M&A activities involve acquiring firms from developed markets and target firms from emerging markets; by contrast, Chinese M&A activities in the U.S. exemplify emerging-market firms intending to acquire firms in a developed market. Secondly, and more importantly, while the objective among American firms in acquiring Chinese firms is acquiring market share for the most part, the goals of Chinese firms, by contrast, revolve around the more advanced technology and better management offered by American firms. Because China’s outbound M&A activities in the U.S. is a relatively new phenomenon, this article covers some important issues in this generally untapped area based on limited cases, data, and scholarly articles that are available.

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