Foreign Acquisitions in China and Multinationals’ Global Market Strategy

14 Pages Posted: 29 Jan 2016

See all articles by Qing Liu

Qing Liu

Renmin University of China

Larry D. Qiu

The University of Hong Kong - Faculty of Business and Economics; Hong Kong University of Science & Technology (HKUST) - Department of Economics

Zhigang Li

University of Hong Kong

Date Written: February 2016

Abstract

Using firm‐level data from 2000 to 2006, we find that foreign acquisitions in China change the target firms’ export extensive margins. We develop a three‐country model with cross‐border acquisitions to show that the acquirers can alter the targets’ export decision through three possible channels: fixed‐cost jumping, technology transfer and global market reorganization. We find evidence that foreign acquisitions change the Chinese target firms’ probability of exporting to a third market. Technology transfer is not observed. Evidence implies that fixed‐cost jumping is used to enable the targets to export, while global market reorganization is a key motive for the acquirers to withdraw the targets from the export market.

Suggested Citation

Liu, Qing and Qiu, Larry Dongxiao and Li, Zhigang, Foreign Acquisitions in China and Multinationals’ Global Market Strategy (February 2016). Review of Development Economics, Vol. 20, Issue 1, pp. 87-100, 2016. Available at SSRN: https://ssrn.com/abstract=2724289 or http://dx.doi.org/10.1111/rode.12213

Qing Liu (Contact Author)

Renmin University of China ( email )

Larry Dongxiao Qiu

The University of Hong Kong - Faculty of Business and Economics ( email )

Pokfulam Road
Hong Kong
China

Hong Kong University of Science & Technology (HKUST) - Department of Economics ( email )

School of Economics and Finance
University of Hong Kong
Pokfulam
Hong Kong

HOME PAGE: http://www.bm.ust.hk/~larryqiu/

Zhigang Li

University of Hong Kong ( email )

Hong Kong, HK
China
852-9722-3859 (Phone)

HOME PAGE: http://www.econ.hku.hk/~zli

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