A Study On Transnational Corporations' Strategic Location And Direct Investment In Chongqing

It is getting increasing importance that how Chongqing can make its way out of the fierce competition for foreign capital in the 'Western region development' movement of China after its entry into WTO.This study elevates TNCs' direct investment behaviors to a strategic level, trying to build an appropriate analysis model based on strategic management process theory and FDI theories.With this model, the study firstly explains the empirical results of TNCs' FDI and strategic locations in Chongqing from 1978 to 2002.Secondly, it properly predicts the trends of change and adjustment in the coming 2 to 3 years, influenced by key environment factors such as 'China' entry into WTO' and 'Western region development'. The end purpose of this study is to make some constructive suggestions on introducing and managing TNCs' FDI to the municipal government, according to the above predictions and Chongqing's unique competitive advantages and future plan, so as to have TNCs' FDI not only contributed to the growth of local economy but also caused positive change to local economic structure.The research shows that the model can be well used to explain and predict TNCs' FDI strategy and its implementing behaviors. In model analysis, the study results are listed below: 1 .The advantageous environment for investment in China, especially in Chongqing is the primary energy of TNCs' FDI. 2.Most TNCs' FDI into Chongqing are market-oriented, induced investment. 3.Influenced by external environment, TNCs will speed up their adjustment of strategy, coming more quickly and with larger amount of investment. They will also implement their 'localization' strategies further and upgrade their Chongqing business units in their global network. They will focus on hi-tech industries and invest more in services fields, such as trade, finance, insurance, etc. And their investments will be more systematic and organical. They will change from competing for tangible resources to intangible resources, especially human resources. Finallly, they will strengthen their cooperation with their Chongqing local partners, more strategic alliances will be built up with them.According to the above predictions, the study concludes with some suggestions to Chongqing municipal government. First, it should innovate its ideas on introducing foreign capital and TNCs.Second, it should put more efforts on improve its market economy system and its environment for investment. Third, it should try and explore new ways andmethods of introducing and managing TNCs' FDI, encouraging TNCs to upgrade the level of their Chongqing projects in their company hierarchy and invest more up-to-date technologies in them.