MNCs In China: Causes For & Implications Of The Tendency To Wholly Own Subsidiaries

Ever since the Policies of Economic Reforms and Opening-up were carried out, inward FDI in China has been increasing rapidly, driving up the economy as well as market forces. However it is noted that the basic mode of inward FDI in China has been changing since late 1990s, i.e. the former Equity Joint Ventures(EJVs) is being replaced by Wholly Foreign-Owned Enterprises(WFOEs), which happens either to green grass foreign investors, or incumbent EJVs. As a result, WFOE has become the dominant mode of MNCs now.What does this tendency mean to China's economy and enterprises? How can we deal with it? Those are questions this dissertation chooses to answer that is arranged as follows: Firstly the author summarizes the important literatures on EJVs and WFOEs, Secondly analyses the process and features of this tendency to wholly own subsidiaries, Thirdly establishes an analytical framework of "corporate drivers -business climate drivers -corporate behavior" for the research, and then puts forward and proves a hypothesis of MNC drivers by doing an empirical research on choices made by MNCs in China. Finally, the author sums up the negative impact of the tendency on China's economy, and develops countermeasures against it.In doing so, the author finds out that this tendency is on the one hand deeply related to MNCs' global strategy, especially their vital assets, their business structure, their knowledge of China's markets; and on the other hand, the tendency is a strong reaction by MNCs to changes in China's business climate, resource supply and FDI policies. With the developing and maturing of China's market economy, and with the improving of China's strategic position in the world. it is foreseen that the...