Foreign acquisitions in China and multinationals' global market strategy

Qing LIU*, Larry D. QIU, Zhigang LI

*Corresponding author for this work

Research output: Journal PublicationsJournal Article (refereed)

1 Scopus Citations

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.
Original languageEnglish
Pages (from-to)87-100
Number of pages14
JournalReview of Development Economics
Volume20
Issue number1
Early online date28 Jan 2016
DOIs
Publication statusPublished - Feb 2016
Externally publishedYes

Bibliographical note

The authors thank Andy Bernard, Bo Chen, Kalina Manova, Jim Markusen, Phil McCalman, Peter Neary, Zhigang Tao and the referee for their valuable comments. Liu thanks the financial supports from National Science Foundation of China (Project No. 71302009 and 71541002) and the Fundamental Research Funds for the Central Universities in UIBE (CXTD4‐02). Qiu acknowledges the financial support from RGC Competitive Earmarked Research Grant of Hong Kong (No. HKU17501914).

Fingerprint Dive into the research topics of 'Foreign acquisitions in China and multinationals' global market strategy'. Together they form a unique fingerprint.

  • Cite this