Mergers and Acquisitions In China

Posted by goldmillennium on July 22nd, 2013

China mergers and acquisitions are growing day by day. Records show that a total overseas merger is approximately 65.2 billion U.S. dollars, which certainly is slow yet a remarkable growth. The growth recorded each year is 54%. China is one country that has experienced a remarkable boom in the industry of mergers and acquisitions. However, companies need to take into consideration certain things before acquiring a new enterprise.

Mergers and acquisitions mainly started because of the downfall in the European market which affected the world market in totality. Since the capital market and the credit market dropped drastically, mergers and acquisitions followed quickly. All those affected the banking system to a greater extent. Such things wane the economy as a whole. All these resulted in bankruptcy of companies, and the economy went to doldrums to such an extent that survival becomes difficult. Hence mergers and acquisition were regarded as the lender of the last resort which favourable to both parties. The companies, which found it difficult to survive, can do well after they are acquired or merged with a flourishing company.

On the contrary, acquisition is not something wise if the market is booming. China mergers and acquisitions are growing day by day are beneficial only if there is a downfall in the economy. It is to be noted that a crisis in the domestic market plays a pivotal role in the entire scenario of mergers and acquisitions. If the domestic market falls, foreign companies rush to acquire local companies. This is because the crisis certainly affects the local companies and they may want the help of a holding company to fight the crisis. On the contrary, when other economies face a downfall, Chinese companies can act as holding companies by acquiring foreign companies unlike in domestic crisis where other companies can acquire Chinese firms.

Acquisitions and mergers play a major role in stabilizing the situation. The currency rate will also come back to normal slowly if the companies flourish after acquisition.

These details are to be considered while going in for acquisition and merger deals. A downfall in either of the markets certainly affects the working of the economy of a place. Foreign and domestic along with certain related factors like product regulation, government rules and regulations, etc. play a vital role in acquiring any company.

About the Author:
Mr. Javier Hernandez, CEO is an international lawyer with a Master’s in European Union Law, International Business Transaction and Commercial Law and Chinese Law. Mr. Hernandez has eight years of experience in China and specializes in the business and legal areas in China including laws related to company formation & representative office in China. He has published and gained recognition in several magazines, including the Tsinghua Enterprise Business School magazine, as well as European and American magazines.

Like it? Share it!


goldmillennium

About the Author

goldmillennium
Joined: October 15th, 2012
Articles Posted: 14

More by this author