Direct Investment In China-owned Trend And Countermeasures

Since the great improvement of China's investment environment during the twenty years of reform and opening, transnational corporations has made China their first choice to invest. Along with the increase of transnational corporations investing in China, they prefer to choose directly build exclusively foreign invested branches or merger originally state owned enterprises in order to maximize their benefits. In the resent years, more and more transnational corporations have been joining in the exclusive investment trend.First, the paper introduces five theories, followed by the status of the exclusive investment trend. The paper analyses the factors which produce the exclusive investment trend on the basis of the fact of China. The factors include the monopoly of technology, integration of global strategy, and accumulative internal contravention of the venture enterprises drive the transnational corporations to choose the exclusive mode. Moreover, deregulated investment policies of China, decreased country risk, huge market, improved infrastructures as well as sufficient human resources of high education further facilitate the transnational corporation to opt for exclusive investment mode in China.It's an undeniable fact that the transnational corporations' trend of wholly-foreign-owned has done some good to our Chinese enterprises as well as our economic development. But the paper emphasizes the negative influences imposed by the transnational corporation's trend of exclusive investigation. And as to the bad effect, wholly foreign owned enterprises are decreasing the spread of technology, furthermore leading to the converse technology spread. The trend of exclusive investment may lead to monopoly. Transnational 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. Encroach upon the domestic brand and our national assets etc. On the basis of the analyses, puts forward several suggestions for the government and domestic enterprises of China. Finally this thesis presents the solutions for Chinese government and Chinese enterprises. 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. Standardize our national asset appraisal system. 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.Regarding to the enterprises, when choosing transnational corporations for co-operation, they should adopt flexible policies to protect their own benefits as well as improve the consciousness of brand protection, and enhance the study ability in joint venture. Small and medium-sized enterprise should take an active part in the strategic alliance. 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. All the capable enterprises should compete in the international market.