跨国财务管理16章课件

1Part5FinancialmanagementofMNCSChapter16ForeignDirectInvestmentandCross-borderAcquisitionsChapter17InternationalCapitalStructureandtheCostofCapitalChapter18InternationalCapitalBudgetingChapter19MultinationalCashManagementChapter21InternationalTaxEnvironment2Chapter16ForeignDirectInvestmentandCross-borderAcquisitionsChapterObjective:

ThischapterdiscussesvariousissuesassociatedwithforeigndirectinvestmentsbyMNCs,whichplayakeyroleinshapingthenatureoftheemergingglobaleconomy.3Chapter16ForeignDirectInvestmentandCross-borderAcquisitionsChapteroutlines:GlobalTrendsinFDIWhyDoFirmsInvestOverseas?Cross-BorderAcquisitionsPoliticalRiskandFDI4KeywordsFDIflowsFDIstocksGreenfieldinvestmentCross-bordermergersandacquisitionsIntangibleassetsProductlife-cycletheory无形资产跨国并购绿地投资对外直接投资流量对外直接投资存量产品生命周期理论51.GlobalTrendsinFDIFirmsbecomemultinationalwhentheyundertakeforeigndirectinvestments（FDI).FDIisinvestmentinaforeigncountrythatgivestheMNCameasureofcontrol.61.1TwotypesofFDIGreenfieldInvestmentFDIofteninvolvestheestablishmentofnewproductionfacilitiesinforeigncountriessuchasHonda’sOhioplant.Cross-BorderAcquisitionFDImayalsoinvolvemergersandacquisitionsofexistingforeignbusinesses.AnexampleisprovidedbyFord,whichrecentlyacquiredeffectivecontrolofMazda,aJapanesecarmanufacturer,aswellasJaguar,aBritishautomobilecompany.71.2FDIflowsandFDIstocksTheFDIoutflowin2006was$1215.8billion.TheFDIinflowin2006was$1305.9billion.FDIstocksaretheaccumulationofpreviousFDIflows,whichwas$12474.3billionin2006.AverageAnnualFDI(inBillionsUSD)2002-200616-891.3China’sFDIflows102.WhyDoFirmsInvestOverseas?Whydofirmslocateproductionoverseasratherthanexportingfromthehomecountryorlicensingproductiontoalocalfirminthehostcountry?TradeBarriersImperfectLaborMarketsIntangibleAssetsVerticalIntegrationProductLifeCycleShareholderDiversificationService111.1TradeBarriersGovernmentsmayimposetariffs,quotas,andotherrestrictionsonthefreeflowofgoods,servicesandpeople.Sometimes,governmentsmayevenimposecompletebanstotheinternationaltradeofcertainproducts.122.1TradeBarriersFacingbarrierstoexportitsproductstoforeignmarkets,afirmmaydecidetomoveproductiontoforeigncountriesasameansofcircumventingthetradebarriers.AclassicalexampleisHonda.SincethecarsproducedinOhiowouldnotbesubjecttoU.S.tariffsandquotas,HondacouldcircumventthesebarriersbyestablishingproductionfacilitiesintheU.S..132.2LaborMarketImperfectionsAmongallfactormarkets,thelabormarketistheleastperfect.Ifthereexistrestrictionsontheflowofworkersacrossborders,thenlaborservicescanbeunderpricedrelativetoproductivity.TherecentsurgeinvestmentinChinacanbeattributable,inpart,tothehighlyproductive,low-costworkforcesinChina.刘植荣：世界工资研究报告LaborCostsaroundtheGlobe(2006)CountryAverageHourlyCost($)CountryAverageHourlyCost($)Germany$34.21Japan$20.2Belgium$31.85Spain$18.83Sweden$31.8Korea$14.72UK$27.1Israel$12.98Australia$26.14Taiwan$6.43Canada$25.74HongKong$5.78Italy$25.07Brazil$4.91France$24.9Mexico$2.75US$23.82Philippines$1.07China$0.6716-14152.3IntangibleAssetsMNCsoftenenjoycomparativeadvantagesduetospecialintangibleassetstheyposses.Examplesincludetechnological,managerial,andmarketingknow-how,superiorR&Dcapabilities,andbrandnames.Sincethepropertyrightsinintangibleassetsaredifficulttoestablishandprotect,especiallyinforeigncountrieswherelegalrecoursemaynotbereadilyavailable.Coca-Colahasaveryvaluableassetinitscloselyguarded“secretformula”.Toprotectthatsecretformula,Coca-ColahaschosenFDIoverlicensing.162.4VerticalIntegrationMNCsmayundertakeFDIincountrieswhereinputsareavailableinordertosecurethesupplyofinputsatastableprice.Verticalintegrationmaybebackwardorforward:Backward:involveanindustryabroadthatproducesinputsforMNCs,e.g.afurnituremakerbuyingaloggingcompany.Forward:involveanindustryabroadthatsellaMNC’soutputs,e.g.aU.S.automakerbuyingaJapaneseautodealership.172.5ProductLifeCycleNewproduct:U.S.firmsdevelopnewproducts,suchascomputers,televisionsandmass-producedcars,andfirstmarketedinthedomesticmarket,andthenmarketsexpandoverseas.Maturingproduct:FDItakesplacewhenproductreachesmaturityandcostbecomesanimportantconsiderationfortheMNC.Standardizedproduct:importedfromoverseas.182.5ProductLifeCycleQuantityQuantityTheU.S.LessadvancedcountriesproductionNewproduct Maturingproduct StandardizedproductNewproduct Maturingproduct Standardizedproductexportsconsumptionconsumptionimportsproductionimportsexports192.5ProductLifeCycleItshouldbenotedthattheProductLifeCycletheorywasdevelopedinthe1960swhentheU.S.wastheunquestionedleaderinR&Dandproductinnovation.IncreasinglyproductinnovationsaretakingplaceoutsidetheUnitedStatesaswell,andnewproductsarebeingintroducedsimultaneouslyinmanyadvancedcountries.Productionfacilitiesmaybelocatedinmultiplecountriesfromproductinception.202.6ShareholderDiversification

servicesFirmsmaybeabletoprovideindirectdiversificationtotheirshareholdersifthereexistssignificantbarrierstothecross-borderflowofcapital.CapitalMarketimperfectionsareofdecreasingimportance,however.Managerscanthereforeprobablynotaddvaluebydiversifyingfortheirshareholdersastheshareholderscandosothemselvesatlowercost.21KeywordsPoliticalriskcountryriskInternalizationtheoryOverseasPrivateInvestmentCorporationSynergisticgains利润增值效应内部化理论政治风险海外私人投资公司国家风险3.Cross-BorderMergers&AcquisitionsGreenfieldInvestmentBuildingnewfacilitiesfromthegroundup.Cross-BorderAcquisitionPurchaseofexistingbusiness.Cross-BorderAcquisitionrepresents40-50%ofFDIflows.Cross-borderacquisitionsareapoliticallysensitiveissue:Greenfieldinvestmentisusuallywelcome.Cross-borderacquisitionisoftenunwelcome.16-22234.PoliticalRiskandFDIUnquestionablythisisthebiggestriskwheninvestingabroad.“Doestheforeigngovernmentupholdtheruleoflaw?”Abigsourceofriskisthenon-enforcementofcontracts.Politicalriskreferstothepotentiallossestotheparentfirmresultingfromadversepoliticaldevelopmentsinthehostcountry.244.1PoliticalRiskDependingontheincidence,politicalriskcanbeclassifiedinto:MacroRiskAllforeignoperationsareaffectedbyadversepoliticaldevelopments.MicroRiskSelectedforeignoperationsareaffectedbyadversepoliticaldevelopments.254.1PoliticalRiskDependingonthemannerinwhichfirmsareaffected,politicalriskcanbeclassifiedinto:TransferRiskUncertaintyregardingcross-borderflowsofcapital,payment,andthelike.OperationalRiskUncertaintyregardinghostcountriespoliciesonfirm’soperations.ControlRiskUncertaintyregardingownershipandcontroloflocaloperations.264.2MeasuringPoliticalRiskThehostcountry’spoliticalandgovernmentsystem.Acountrywithtoomanypoliticalpartiesandfrequentchangesofgovernmentisrisky.Trackrecordsofpoliticalpartiestheirrelativestrength. Ifthesocialistpartyislikelytowinthenextelection,watchout.274.2MeasuringPoliticalRiskIntegrationintotheworldsystem.NorthKorea,Iraqareexamplesofisolationistcountriesunlikelytoobservetherulesofthegame.Ethnicandreligiousstability.DomesticpeacecanbeshatteredbyEthnicandreligiousconflicts,causingpoliticalriskforforeignbusiness.284.2MeasuringPoliticalRiskRegionalsecurityRealandpotentialaggressionfromaneighboringcountryisobviouslyamajorsourceofpoliticalriskKuwaitisaniceenoughcountry,butit’sinaroughneighborhood.KeyeconomicindicatorsPoliticalriskisnotentirelyindependentofeconomicrisk.294.3HedgingPoliticalRiskGeographicdiversificationSimplyput,don’tputallofyoureggsinonebasket.MinimizeexposureFormjointventureswithlocalcompanies.JoinaconsortiumofinternationalcompaniestoundertakeFDI.Financeprojectswithlocalborrowing.304.3HedgingPoliticalRiskInsuranceTheOverseasPrivateInvestmentCorporation(OPIC)aU.S.governmentfederallyownedorganization,offersinsurance.31Questions1.JapaneseMNCs,suchasToyota,Toshiba,Matsushita,etc.,madeextensiveinvestmentsintheSoutheastAsiancountrieslikeThailand,MalaysiaandIndonesia.Inyouropinion,whatforcesaredrivingJapaneseinvestmentsintheregion?32AnswersMostlikely,theseJapaneseMNCshaveinvestedheavilyinSoutheastAsiainordertotakeadvantageofunderpricedlaborservicesandcheaperlandandotherfactorsofproduction.33Questions2.HowwouldyouexplainthefactthatChinaemergedasthethirdmostimportantrecipientofFDIaftertheUnitedStatesandtheUnitedKingdominrecentyears?34AnswersChinaattractedagreatdealofFDIrecentlybecauseforeignfirmswantto(I)takeadvantageofinexpensivelaborandresources,andalso(ii)gainaccesstotheChinesemarketthatisoftennotaccessibleotherwise.35Questions3.ExplainVernon’sproductlife-cycletheoryofFDI.Whatarethestrengthandweaknessofthetheory?Answer:Accordingtotheproductlife-cycletheory,firmsundertakeFDIataparticularstageinthelife-cycleoftheproductsthattheyinitiallyintroduced.Whenanewproductisintroduced,thefirmchoosestokeepproductionathome,closetocustomers.Butwhentheproductbecomematureandforeigndemandsdevelop,thefirmmaybeinducedtostartproductioninforeigncountries,especiallyinlow-costcountries,toservethelocalmarketsaswellastoexporttheproductbacktothehomecountry.36AnswersＴheproductlife-cycletheorycanexplainhistoricaldevelopmentofFDIquitewell.Inrecentyears,however,theinternationalsystemofproductionhasbecometoocomplicatedtobeexplainedneatlybythelife-cycletheory.Forexample,newproductsareoftenintroducedsimultaneouslyinmanycountriesandproductionfacilitiesmaybelocatedinmanycountriesatthesametime.37Questions4.Whydoyouthinkthehostcountrytendstoresistcross-borderacquisitions,ratherthangreenfieldinvestments?38AnswersThehostcountrytendstoviewgreenfieldinvestmentsascreatingnewproductionfacilitiesandnewjobopportunities.Incontrast,cross-borderacquisitionscanbeviewedasforeigntakeoverofexistingdomesticfirms,withoutcreatingnewjobopportunities.Andmostcountriesprefertoretainlocalcontrolofdomesticfirms.39Questions5.Definecountryrisk.Howisitdifferentfrompoliticalrisk?Answer:Countryriskisabroadermeasureofriskthanpoliticalrisk,astheformerencompassespoliticalrisk,creditrisk,andothereconomicperformances.40Questions6.WhatfactorswouldyouconsiderinevaluatingthepoliticalriskassociatedwithmakingFDIinaforeigncountry?41AnswersFactorstobeconsideredinclude:thehostcountry’spoliticalandgovernmentsystem;trackrecordofpoliticalpartiesandtheirrelativestrength;thedegreeofintegrationintotheworldsystem;thehostcountry’sethnicandreligiousstability;regionalsecurity;keyeconomicindicators.1.Undera1981VoluntaryTradeAgreementJapaneseautomobilemanufacturerswerenotallowedtoincreasetheirexportstotheU.S.market.Asaresult:a)Theyexitedthemarketb)Hondawasmotivatedtocircumventthetradebarriers.c)Honda’sFDImayhavebeenpartofanoverallcorporatestrategydesignedtobolstertheircompetitivepositionvis-à-vistheirdomesticrivalssuchasToyotad)Bothb)andc)42Answer:d2.Honda’sdecisiontobuildaplaninOhioa)WaswelcomedbytheUnitedAutoWorkersb)WasencouragedbyassistancefromthestateofOhio,includingimprovedinfrastructurearoundtheplantandabatementofpropertytaxes.c)InvolvedsettingupaspecialforeigntradezonethatallowedHondatoimportautopartsfromJapanatareducedtariffrate.d)Alloftheabove43Answer:d3.WhenfirmsundertakeFDI,a)TheybecomeMNCsb)Theyreducetheirtaxratesincetheycantelleachcountrythattheydobusinessinthattheypaidtheirtaxesinothercountries.c)Thecanexploitworkersbypayingthembelow-marketwagesindepreciatingcurrencies.d)Alloftheabove44Answer:a4.TheFordMotorCompanyrecentlyacquiredMazda,aJapaneseautomaker,andJaguar,aBritishautomaker.a)Thisisanexampleofcross-borderM&Ab)ThiswasaGreenfieldinvestmentc)Botha)andb)d)Noneoftheabove45Answer:a5.JapanplaysamajorroleasanexporterofFDI.AsarecipientofFDIa)JapanreceivesasmuchFDIasitexports,makingitamajorplayeronbothfronts.b)Japanplaysarelativelyminorrole,reflectingavarietyoflegal,economic,andculturalbarrierstoFDI.c)Japan’sreceiptsofFDIarethirdintheworldd)Noneoftheabove46Answer:b6.ThethirdmostimportanthostcountryforFDIisa)TheUnitedStatesb)Japanc)Chinad)Mexico47Answer:c7.MNCshaveinvestedinChinaa)Bylowermaterialcosts.b)Bylowerlaborcosts.c)ByadesiretopreempttheentryofrivalsintoChina’spotentiallyhugemarket.d)Alloftheabove48Answer:d8.FDIstocksa)Arethecommonsharesofmultinationalcompaniesthatinvestabroadb)AremutualfundsthatinvestinFDI c)Representtheaccumulationofpreviousyear’sFDIflowsd)AtthesumtotalofcurrentyearFDIflows49Answer:c9.thekeyfactorsthatareimportantinafirm’sdecisiontoinvestoverseasare:a)Tradebarriers,imperfectlabormarket,andintangibleassetsb)verticalintegration,productlifecycle,andshareholderdiversificationservicesc)profitmaximization,globalprestige,andcompetitiond)a)andb)50Answer:d10.Whydofirmslocateproductionoverseasratherthanexportingfinishedgoods?a)costsb)Firmsseektoextendcorporatecontroloverseasc)Imperfectfactormarketsd)Alloftheabove51Answer:d11.Whydogovernmentsregulateinternationaltrade?a)Toraiserevenueb)Protectdomesticindustriesc)Pursueothereconomicobjectivesd)Alloftheabove52Answer:d12.Laborservicesinacountrymightbeunderpricedrelativetoproductivitybecause:a)Workersarenotallowedtofreelymoveracrossnationalboundariestoseekhigherwages.b)Somecountriesdoabadjobofeducatingtheirworkforce,consequentlytheyarenotveryproductivec)Insomecountriesthereisashortageofcapitalinvestment.d)Alloftheaboveareequallyimportant53Answer:a13.Severeimperfectionsinthelabormarketarisefromimmobilityofworkersduetoimmigrationbarriers.Asaresponse,firmsshouldconsidera)Movingtotheworkers.b)Movingtocountrieswherelaborservicesarethelowestinabsoluteterms.c)Movingtocountrieswherelaborservicesareunderpricedrelativetoproductivity.d)Hiringillegalimmigrants.54Answer:c14.Coca-Colahasinvestedinbottlingplantsallovertheworldratherthanlicensinglocalfirmsa)Becausetheforeignerscan’tbetrustedtofollowthesecretrecipe.b)BecauseCoca-Colawantedtoprotecttheformulaforitsfamoussoftdrink.c)BecauseoftheinternalizationtheoryofFDId)Bothb)andc)55Answer:b15.MNCsmayundertakeoverseasinvestmentprojectsinaforeigncountry,despitethefactthatlocalfirmsmayenjoyinherentadvantages.Thisimpliesthata)MNCsaremakingamistakeinthiscaseandwillhavetoeventuallywithdrawb)MNCsshouldhavesignificantadvantagesoverlocalfirmssuchascomparativeadvantagesduetointangibleassetsc)Thelocalfirmswillnothavetocompeteduetotheirinherentadvantagesovertheforeigners.d)noneoftheabove56Answer:b16.AccordingtotheinternalizationtheoryofFDIa)Firmsthathaveintangibleassetswithapublicgoodpropertytendtoinvestdirectlyinforeigncountries.b)Propertyrightsinintangibleassetsaredifficulttoestablishandprotect,especiallyinforeigncountrieswherelegalrecoursemaynotbereadilyavailable.c)b)anda)d)Noneoftheabove57Answer:a17.U.S.carmakerswereforcedtobuildtheirownnetworkofdealershipstoentertheJapanesemarket.a)Thisisanexampleofbackwardverticalintegrationb)Thisisanexampleofforwardverticalintegrationc)Thisisanexampleofsidewaysverticalintegrationd)Noneoftheabove58Answer:b18.Whichofthefollowingstatementsistrueaboutproductlifecycletheory?a)Intheearlystagesoftheproductlifecycle,thedemandforthenewproductisrelativelyinsensitivetothepriceandthusapioneeringfirmcanchargearelativelyhighpriceb)ItpredictsthatovertimetheU.S.switchesfromanexportingcountryofnewproductstoanimportingcountryc)Ithasan“S”shapedcurvewhenplotting“quantitysold”versus“time”d)Alloftheabove59Answer:d19.Asamodeofentryintoaforeignmarket,cross-borderacquisition:a)Involvesbuildingnewproductionfacilitiesinaforeigncountryb)Offerfasterspeedovergreenfieldinvestmentc)Canofferaccesstoproprietaryassetsd)b)andc)60Answer:d20.Synergisticgainsrefersto:a)gainsfromhedgingb)gainsobtainedwhenthevalueoftheacquiringandtargetfirms,combinedtogether,isgreaterthanthestand-alonevaluationsoftheindividualfirmsc)gainsarisingifthecombinedcompaniescansaveonthecostsofproduction,marketing,distrib