Strategy Of Ownership Structure Of Multinational Enterprise In Foreign Direct Investment

MNC (Multinational Company) is a main model of FDI (Foreign Direct Investment) currently in the worldwide. MNC could come around all relative obstacle of marketing and own the comparative advantages about it. The rapid development of MNC is the one of most influential event about development of economic worldwide since 20th Century. The growing up of MNC changed the traditional economic relation which was based on International Trade, and made manufacture and market real globally worldwide. MNC has become the leading model for international production system, MNC not only change the mode of collocation of resource worldwide, but also impact the order both of current international economic and politics seriously. The corporate governance comes of the separation of between ownership and management. If there is no issue of deputy, there will no issue of corporate governance. If we study issue about corporate governance, we must study ownership first, especially for study of MNC. The study about issue of ownership is the jump-off point for study MNC. So, it is the key issue of study about ownership. Theoretically speaking, the structure of ownership could be defined that it is a status of distribution and a mode of matching. Speaking practically, the structure of ownership is the percentage of owning the share by shareholder. It include that two meaning, one is that centrality of the ownership of shares, i.e. the percentage of owning share by the top five biggest shareholders. Another one is that the structure of ownership, i.e. how many share is owned by each shareholder. The structure of ownership affects the performance of enterprise, in the same time, it also affect the selection of strategy of structure of ownership during FDI. It is the basic motivation to selection the suitable structure of ownership in order to get the good performance of enterprise. Due to the FDI by MNC, it decrease the marginal cost which MNC service to invested country. With the sunk cost and lower marginal cost, MNC could get the more advantage position during competition, and also get the advantage in strategy. The strategy of ownership includes the Management strategy of ownership and structure strategy of ownership. The Management strategy is the selection of building a new company or purchasing a current company. The structure strategy of ownership is that the selection of investment by itself or making a joint venture company. With the analysis for a detail case, we compare the mode of building a new company and purchasing a current company. Then, we analysis the opportunities and risk for different mode. The structure of ownership is the important part of corporate governance. Speaking generally, it is direct ratio that the power of control a company and the percentage of owning the shares. The structure of ownership is the basic of structure of corporate governance; it is also the key issue of parent companygetting the control of company. When a MNC go to invest in a country or region, it is the first step and key issue to make a strategy of ownership, i.e. selection of joint venture or self-investment. The ratio of owning share of stock is the main content of controlling FDI, especially for developing country government. Due the closed relationship between ratio of ownership and benefit, the structures of ownership decide to the power of controlling the company. It is an important part of global strategy for MNC of structure of ownership. The structure of ownership will be not only obeying the whole strategy of MNC worldwide, but also depends on the estimation of risk and policy of government .The adjustment of structure of ownership will lead to the change of organization structure, process and operation system. There also will be the change of action and tendency of competition. With the analysis to investments of Siemens in the worldwide and China, we make a sum-up and conclusion for general theory and rule of strategy of ownership. The history of MNC's investment in China identifies the theory of structure of ownership. With the development of circumstance of investment in China, especially with the adjustment of policy by government, the strategy of ownership of MNC in China is adjusting; there are some latest tendencies about ownership as below: The latest investment based on high percentage of share of stock, the tendency of ownership is now change from Joint Venture Company to Self-investment Company. MNC control the company via know-how of techno ledge.The mode of investment is now changing from building a new company to purchasing a current company. MNC building sales team and control the channel of sales itself. MNC invest to build R&D center in China. So, all above some latest tendency about ownership in China by MNC should be paid attention to, and should analysis it carefully and try to get some measure and action plan. Finally, via the study of some problem about Chinese company during investment in foreign country, we remind that Chinese company not only should pay attention to the study of techno ledge and management, but also pay more attention to the corporate governance, especially for study of structure of ownership. In the same time, we also supply some ideas and advise to them, and hope it will do some help when they go abroad investment.