Premises and effects of mergers and acquisitions concluded by Chinese companies in the high-tech sector

Abstract

PURPOSE: The article aims to identify the reasons for M&A in the high-tech sector as well as the market and economic effects of this form of agreements.

DESIGN/METHODOLOGY/APPROACH: The basis for the implementation of the research goal was the case study analysis of five M&As that were conducted in 2016/2017 by Chinese companies on the European market in the high-tech sector. The course of these forms of integration in the context of shaping the companies’ economic strength, position, and directions of strategic development on the market were analyzed.

FINDINGS: The analysis shows the following main reasons for Chinese companies to conclude M&As in the high-tech sector. The need to acquire modern and environmentally friendly production technologies, companies striving to strengthen their competitive position on the market and increase their development prospects in the long term, as well as implementation of China's government policy aimed at the innovative economy development. The main effects achieved by these companies are access to valuable know-how, strategic technological solutions, new markets, and new customers, as well as growth of the companies' potential and strengthening of their market position. In turn, the benefits for European companies include the possibility of access and expansion to the Chinese market, in particular access to suppliers and rich resource bases. Moreover, thanks to agreements with Chinese partners, European companies improve and stabilize their financial situation, which is a key factor in the implementation of the adopted development strategies.

PRACTICAL IMPLICATIONS: The research results are an important source of information and inspiration for companies that are considering Mergers or Acquisitions in the high-tech sector. Companies should adapt their management model to the requirements imposed by the specificity of this type of transaction and to their conditions. Moreover, it is worth paying attention to the necessity to prepare managerial staff and increase employees' awareness of M&As and their effects on strategic development, organizational culture, and operational processes in companies.

ORIGINALITY/VALUE: The article allows to reduce the research gap regarding the role of M&A in achieving the goals of strategic development of Chinese companies, as well as European companies operating in the high-tech sector.