Entering Modes Of FDI And Their Influence On Host Country's Market Structure

In the process of economic globalization, the Foreign Direct Investment (FDI) brought by all the countries in the world is turning up sharply. The influence of FDI on the economic growth, structural adjustment and technical progress of all countries is becoming more and more important. There are tow entering modes of FDI, including new investment and cross-border merger and acquisitions (Cross-Border M&As), which show different impacts in market structure, industrial structure, technological transferring, employment and other aspects. With the level of Chinese reform and open deepening, the amount of FDI inflowing our country continues to mount up. All social sectors come to emphasis on the entering modes of FDI and their influences on the market structure of host country. In 2006, we concluded the period of transition of entering World Trade Organization, so we have opened more industries to foreign investment. So, which mode of bring FDI is adopted by our country and which mode is benefit for adjusting our market structure, these questions are obviously important. Therefore, the paper does some research on the two entering modes of FDI and their influence on host country's market structure, which not only has theory value, but also has practical significance.This paper moves along with the following logic paths:posing the questions, defining the conceptions, elaborating the relative theories, analyzing the influencing factors, doing the positive analysis, analyzing the effect on market structure, examining the automobile industry, putting forward to corresponding policy. The author applies the theory of export of international capital, the eclectic theory of international production, transaction cost theory, industrial organization theory and other relative theories, does some research on the two entering modes of FDI and their effect on the market structure of host country. Based on the retrospect, the paper presents exploratory research on the following aspect.The first aspect is the research method. The paper tries to analyze the relationship of new investment and cross-border M&As by using the theory of international export of capital. It combines the eclectic theory of international production with transaction cost theory, the theoretical analysis with the empirical studies and propounds the mode of four-dimensional system called "L-OTS". The paper classifies the affecting factors into two parts, including the host country's factors and the multinational corporation's (MNC) factors.The second aspect is the research contents. Seldom domestic scholars do empirical studies on the factors of affecting the two entering modes of FDI. Nobody analyzes the host country's factors and the MNC's factors at the same time. So the empirical studies on the paper are quite comprehensive. Some results play a large role in putting forward the measures and policies for our country bring the FDI.The third aspect is the angle of the research. The paper mainly studies the most important and determinate factors of market structure, which are scale economy, market concentration rate, barriers to enter and exit and product differentiation when the author analyzes the influence of two entering modes of FDI on the market structure of host country. The paper also analyzes the differences of the affection of the two entering modes on the above four sides and the market structure.The fourth one is choosing the representative automobile industry to do positive analysis on influence of the entering modes of FDI on host country's market structure. The paper deeply analyzes the new investment and cross-border M&As affect the world and Chinese automobile industry and their differences. Base on the studies, the paper brings forward the measures for developing our automobile industry making use of the FDI.The research of this paper is roughly divided into seven chapters. The first chapter is the introduction, including the background, significance of the studies, research methods, literature review and innovations and putting forward the questions that the paper will settle. It also consolidates relative data and proclaims the changes of the modes of FDI entering to the world and China and its differences. FDI entering world is mainly on the mode of cross-border M&As, but entering China is mainly on new investment. It also makes clear the several questions that the paper will solve.Chapter two introduces the fundamental conceptions and the relative theories. It defines FDI, new investment and cross-border M&As and their relations. It also reviews the relative theories about FDI and market structure.Chapter three introduces the development course of FDI inflowing into world and China and the two entering modes'developing course. It analyzes the relation between new investment and cross-border M&As based on the theory of export of international capital and draws an inference that cross-border M&As is the high form of FDI.Chapter four combines the eclectic theory of international production with transaction cost theory and brings forward a "Four-Dimensional System (L-OTS)". It analyzes the affecting factors of new investment and cross-border M&As not only with theories but also with empirical analysis from two angles, which are host country and MNC.Chapter five does the research on the influence of new investment and cross-border M&As on host country's market structure. It analyzes mainly from four aspects. They are factors of determining market structure, which are scale economy, market concentration rate, barriers to enter and exit and product differentiation.Chapter six studies the effect of different FDI entering modes on automobile industry on the basis of empirical analysis of the global and Chinese automobile industry. It compares the developing course of FDI inflowing world and China in automobile industry and analyzes the influence of new investment and cross-border M&As on the automobile market structure of world and China.Chapter seven brings forward the measures and policy recommendations from three aspects based on the preceding theoretical and empirical analysis. They are guiding the cross-border M&As correctly in our country, adopting cross-border M&As to improve Chinese market structure, utilizing FDI in Chinese automobile industry efficiently.