Study On The Transformation Strategy Of Foreign Trade Growth Pattern For Shandong Province

Since the reform and opening-up policy was launched in China, Shandong's foreign trade has had sustained development, and achieved great success. In 1984, the import and export volume of Shandong province was only 3.52 billion＄, but in 2008 it reached 158.14 billion with an increase of 29% over the previous year. Besides, its foreign trade surplus reached 28.2 billion＄in 2008, and the import and export volume increased by 45 times from 1984 to 2008. Foreign trade has become a more and more important force driving the economic growth in Shandong Province. In 2008, the contribution rate of the foreign trade to the economic growth is 40%. From the perspective of employment, it also provides many jobs which help to reduce the employment stress.In terms of foreign trade structure, the optimization and upgrading of product structure goes well. Export of mechanical and electrical products has achieved significant growth in recent years, and become the largest part of all the exporting products. The total amount of foreign capital utilization in Shandong Province expands year by year. The manufacturing sector like automobile, shipbuilding, construction machinery and home appliances is the key area of foreign investment. High-tech and service industries develop fast by the utilization of foreign capital, and become a new main growth point. Some world-class service companies like Wal-Mart, Carrefour, Deloitte and PwC have already set up their own branches in Shandong Province. At the same time, many companies from Shandong Province have had successful foreign direct investment in other countries. By 2006, more than 1,200 enterprises had launched processing trade, resource exploitation and project contracting all over the world. And now they are involving in economic globalization, international competition and cooperation as an important power in the global market.Although Shandong Province has achieved rapid expanding scale of foreign trade and great upgrading of foreign trade structure, there are still many serious problems. The main problems are as follows:firstly, the effectiveness of export is low, and the competition is weak. Because of the lack of independent brands and self-owned intellectual property, the profit from processing trade is very low. Besides, vicious competition among the companies producing similar products leads to a substantial decline in export prices and deteriorating terms of trade. Secondly, most of the export products are low-tech and labor-intensive. And semi-finished products take a large proportion. The phenomenon that export products depend on high consumption of energy and resources has not been effectively controlled. This is against the sustainable development of economy and trade. Thirdly, serious foreign trade development imbalance between different regions exists in Shandong Province. There is rapid development in eastern region, but the development in western region is lagging behind seriously. Fourthly, the development of service trade is much slower than the commodity trade development, and the service trade is in general at a very low level. Moreover, this is against the general laws of economic development. Fifthly, there are still many foreign trade friction cases which lead to reduced export earning, increased cost and risk of foreign trade. The problems could be summarized as follows:the export products are low-tech and labor-intensive; Trade in service relative to goods trade, lags behind seriously. Export relies too much on processing trade; Lack of independent brands and self-owned intellectual property rights.The root of the above-mentioned problems is the extensive foreign trade growth pattern in Shandong province. So we must transform the extensive effective way into the intensive style in order to solve the problems fundamentally and develop the foreign trade sustainably. Transformation of the foreign trade growth pattern would not only overcome the current foreign trade problems and achieve sustainable development,but also meet the major policies in China. Therefore, research on the transformation strategy has important practical significance. And it can also help the foreign trade enterprises make their future policies and change their modes of business operation.This paper divides into five parts altogether:The first part describes the situation of foreign trade development in Shandong province and its current problems. The second part introduces the definition of foreign trade growth pattern and analyses the basic elements affecting its transformation. The third part discusses the reasons for the foreign trade growth pattern transformation, and gives a direction of the transformation. The fourth part focuses on the transformation strategy of foreign trade growth pattern for Shandong province. The last part of this paper is conclusion.