This section provides background on what factors drive foreign firms to acquire US companies.
Business Roundtable:Buying and selling: Cross-border mergers and acquisitions, and the US corporate income tax: “Divesting some lines of business and acquiring others allows companies to [more quickly] enter new markets, access new distribution channels…” (p.2)
A Bridgestone HosePower Announces Acquisition said of its acquisition of a small (16 employee) company in Seattle: “This acquisition broadens our presence in the country and enhances [our] leadership in the market…”
US Chamber of Commerce: Faces of Chinese Investment in the United States: “[The foreign firm] saw opportunities in the U.S. power equipment industry… and it saw a “huge opportunity for growth’. [The acquired company] was “more centrally located and made a better operating base for shipping mowers to its major markets in the U.S. Southeast, Northeast, and Midwest.’ ” (p.34)
Access to Technology and Know-how
Business Roundtable: Buying and selling: Cross-border mergers and acquisitions, and the US corporate income tax: “Companies from different countries may have access to different stocks of local know-how, product types, specialized suppliers, workforces… all of which can have an important influence on companies’ competitive capabilities.” (p.4)
Chinese FDI in the US:“When obtaining technology to compensate for their competitive disadvantages, Chinese firms have been known to acquire existing firms rather than establishing new firms, thus obtaining a full package of advantages with which they can upgrade domestic manufacturing and product development efforts.” (p.448)
US Chamber of Commerce:US Chamber_Faces of Chinese Investment: An oil & gas company described its U.S. FDI strategy this way: “[We] chose to enter into a number of joint venture projects with U.S. energy companies… [where we] gain access to resources, cutting- edge technology, and novel drilling practices through partnerships.” (p.7)…..A performance sportswear apparel company explained that it wanted to tap the U.S. market but realized it needed a U.S. partner to be successful. Its advice to other Chinese companies: “Find a U.S. partner that can help translate your value proposition in the U.S. market. While your product or service may achieve great success in China, it may not fit the unique tastes and preferences of U.S. consumers. A U.S. partner can offer expertise and strategies to approach the U.S. market.” (p.12)
Access to Resources
US Chamber of Commerce: Faces of Chinese Investment in the United States: “An oil & gas company described its US FDI strategy: “[We] chose to enter into a number of joint venture projects with U.S. energy companies, purchasing stakes in oil and gas fields and covering operational costs like drilling expenses in exchange for rights to resources…” (p.7)
Business Roundtable: Buying and selling: Cross-border mergers and acquisitions, and the US corporate income tax: “Companies may create synergies through sharing tangible assets like factories, research labs, or distribution systems and enjoying greater economies of scale…” (p.4)
Business Roundtable:An association of chief executive officers of America’s leading companies working to promote a thriving U.S. economy and expanded opportunity for all Americans through sound public policy.
- “Buying and selling: Cross-border mergers and acquisitions, and the U.S. corporate income tax”; 2017
US Chamber of Commerce:Faces of Chinese Investment in the United States, 2012
Chinese FDI in the US:Chinese foreign direct investment in the United States: Location choice determinants and strategic implications for the State of Indiana; Kelley, D., Coner, J.K., and Lyles, M.;2013; Business Horizons, 56, 443-451.