2.2 The Positive Impact on the Market

　　We must also consider its merits while facing the drawbacks mentioned above, weighing pros and cons as well as preventing the spread of nationalist sentiment which may control our decision. Only in this way can we deal with foreign M & A in an objective and rational manner.

　　Firstly, it is an issue concerning market competition and economy security. According to a survey, the total amount of contract price invested by foreign M & A was less than five billion US dollars, which only accounted for 2.5 percent of the total foreign investments in China during the same period. Yongtu Long, the Secretary-General of the Asian Forum in Boao advocated that the inspection and supervision should be stressed in international mergers, which would not necessarily cause industry monopoly or harm the safety of economy. They were not supposed to be seen as devils. In fact foreign investment may break the monopoly of state-owned enterprises in some areas by echoing or collaborating with private enterprises. To disallow foreign investors to engage, or to adopt the exclusion policy in the name of nationalism does not make the national economy more secure. On the contrary, the more rejection to foreign investments, the more vulnerable the national economy will be. A national security review of foreign M & A can solve the problems concerning economic security and national security.

　　Secondly, it is an issue concerning the loss of national brands. When confronted with the fallbacks of some national brands after international mergers, a more reasonable and objective manner is expected. As a regular situation in market economy, international mergers are transformations of the movable and reorganized capital. Another point we should realize is that, these former national brands are still alive in spite of decadence. They prevail in China, and are still produced and merchandized by Chinese workers and managers, which play important roles in the Chinese job market, and make more or less contributions for the economic development of many areas. Meanwhile, we should notice that, some new national brands are emerging while certain seniors departed in international mergers. It is reasonable to say that the course of decreasing and regenerating itself is actually a course of better selection and sustentation. Going with temporary twists and turns, the course caters for the birth and the development of a growing number of desirable economic entities while shedding off the previous problems in business operations. Of course, we should be alert and preventive to the act of malicious eliminating the competitors'' brands.

　　Finally, it is an issue concerning the reform of the state-owned enterprises （the "SOE"s and the strategic reorganization of state-owned economy. Currently, there are around 400,000 SOEs in China, whose total debts are over 5 billion RMB. At the same time, the strategic reorganization of SOEs requires that the state capital withdraws from certain industries and enter the pillar industries. No matter the proceeds are in the form of asset or equity, the state''s withdrawal needs buyers. However, non-state-owned enterprises that have necessary funds to fulfill this responsibility are quite few at present. The way which foreign capital acquires or merges China''s SOEs has expanded the financing channel of the China''s state economy and provided the important sources of funds for the reform of the SOEs. In addition, foreign capital taking China''s SOEs can provide us with cash on hand rather than the existing state-owned interests. This plays a supplementary role in financing. So, foreign M&A will change the picture that a majority of the listed companies in China are owned by the state as well as will improve the corporate governance of those listed companies, which helps China''s enterprises operating system to conform more with the world.