The Study On Wholly-foreign-owned Model Of Fdi In China

Since the open policy was implemented in 1979, especially after the entrance to WTO, China has got remarkable achievement in making use of FDI. With the gradual improvement of China's investment environment , the scale of making use of FDI expands and the level rises year by year, the modes of using FDI have gradually changed from joined ventures (JVs) and cooperative ventures(CVs) to wholly-foreign-owned enterprises.At first this paper analyses the background, development and current status of wholly-foreign-owned trend of FDI in China, the wholly-foreign-owned trend of FDI is divided into three phases according to different modes in different periods, in 1980s,it is enterprises with Sino-foreign cooperation, in 1990s, it is Sino-foreign joint ventures and in the late 1990s it is full foreign owned enterprise. Nowadays we can find an obvious tendency of wholly-foreign-owned enterprises increase no matter from the increase of investment projects amounts and contract value or the real using value.Multinational companies directly establish exclusively foreign-owned enterprises, through increasing capital,alliance or annexation change Sino-foreign joint ventures and the enterprises with Sino-foreign cooperation into foreign-owned corporations. Why do they do that? What effect will the above change bring to Chinese economy? The thesis summarizes the theories about the cause of single proprietorship in foreign direct investment and its effect on amphitryon country. It analyses the causes of single proprietorship in foreign direct investment theoretically from two aspects—the point of amphitryon country and the point of the multinational corporations. In this way the causes relating analysis should be intact and more convictive.As to the effect of wholly foreign-owned model of foreign direct investment on our country, the thesis systematically analyses the positive and negative influence of the tendency to wholly-foreign-owned entry mode. The exclusively-foreign-owned transnational corporations had more effects on China: Expand the foreign investment in China; Improve the strength of China's utilization of foreign capital;Improve our financial environment during the global financial crisis;Play a demonstration effect on domestic enterprises; Improve the efficiency of the domestic market and so on. As to the bad effect, A wholly foreign-owned enterprise can decrease the spread of technology. The trend of exclusive investment may lead to monopoly. Multinational corporations are prone to control the resources of the industrial field and it is a threat to national economic safety. Escape from the taxes by transferred Price etc.At last, after the intensive analysis of active effect and negative effect which in foreign direct investment the trend of single proprietor brings to us, I make some feasible suggestions to our government and enterprises to cope with that trend. As to the government, it should complete the law system of foreign investment and build up the effective anti-monopoly system. Reinforce the industrial guidance policy and enhance macroeconomic regulations. The Government should give full play to the role of government ,Give more supports on domestic enterprises.In the framework of effective defense,stimulate technological innovation.Establish a complete market monitoring system to guard against the behavior of the transferred price and tax evasion. Standardize the alteration procedures of the stockholder's rights in the purpose of our Chinese dominating the joint venture. Domestic corporations should take advantage of Mainland and set up a more effective management system. And standard technological system should be established in every domestic enterprise. They can improve their management, marketing, innovation abilities so as to enhance the core competition capability. Set up incentive mechanisms, and all the capable enterprises should compete in the international market.