Chapter 6: Cross- border mergers and acquisitions by China in Taiwan 1997–2010
Since the 1990s, the volume of foreign direct investment (FDI) has grown massively and become an important engine for global economic growth. The majority of FDI is created through cross- border mergers and acquisitions (CBMAs), which is an international expansion strategy that provides quick access to new foreign markets (Hitt and Pisano, 2003). For example, in 2005, 78 percent of global FDI inflows were through global CBMAs (UNCTAD, 2006, p. xvii). It is also noteworthy that emerging markets have gradually played an active role in initiating foreign investment activities. According to the World Investment Report (UNCTAD, 2010, p. xix), emerging and transition economies accounted for a quarter of global FDI outflows in 2009. Take China as an example: by 2009, its outward FDI reached US $229.6 billion, an eight- fold increase over the year 2000 (UNCTAD, 2010). Sixty- two percent of China’s outward FDI in 2008 was in the form of CBMAs (MOFCOM, 2008). Although emerging market firms have assumed a critical role in outward FDI, prior management literature has not given sufficient attention to these firms. Therefore, our understanding of the international expansion strategies of firms from emerging markets is very limited (Buckley et al., 2007).
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