Foreign Direct Investment In Wholly-owned Tendency

Since 1980s, the level of making use of the foreign capital rises year by year in China. The main way of making use of foreign capital in China is Feeder Distribution Interface (FDI). also there are some other secondary ways such as issuing oversea capital stocks, international lease financing, compensation transaction and assembly industry. The FDI inflows account for more than 95 percent of the whole foreign capital in China. Dividing by the way of the investment from foreign countries, the form of FDI inflows can be compartmentalized as enterprises with Sino-foreign cooperation, Sino-foreign joint ventures, exclusively foreign-owned enterprises , share–holding enterprises and exploitation with Sino-foreign cooperation. In China the first three forms are so called as three kinds of foreign-invested enterprises, and they are the most important way of using FDI.The form of FDI inflows in China develops with three phases as following: in 1980s, it is enterprises with Sino-foreign cooperation, in 1990s, it is Sino-foreign joint ventures and in the late 1990s it is exclusively foreign-owned enterprises. Nowadays we can find an obvious tendency of exclusively foreign-owned enterprises increase no matter from the increase of investment projects amounts and contract value or the real using value. The real using value from the FDI inflows in China has gone up to 80% in March 2008 from 10.5% in 1983. As the rapid development of the Chinese economy, better establishment of the market mechanism and expand of the opening up of trade, the tendency of exclusively foreign-owned enterprises increasing will be more obvious.Multi-national Companies change the enterprises with Sino-foreign cooperation and Sino-foreign joint ventures into exclusively foreign-owned enterprises by increasing capital, alliance or annexation, or they directly establish exclusively foreign-owned enterprises. Why do they do that? What effect will the above change bring to Chinese economy? Will the exclusively foreign-owned enterprises control Chinese economy and threaten the safety of Chinese industry? In technological spillovers, will the tendency of exclusively foreign-owned enterprises increase bring the same tendency to technological spillovers or reduction? What effect will the above tendency bring to the increasing of Chinese economy and how should we face that? All the above questions are worthy of attention and consideration.This paper fist analyze the evolvement of the exclusively foreign-owned enterprises starting with its development in China, and then give a fully analysis of the reason why the exclusively foreign-owned enterprises increase from the trading volume. Based on the above analysis the paper discuss the effect brought by exclusively foreign-owned enterprises to the safety of China industry, technological spillovers and the increase of the Chinese economy. After all analysis, the author gives a conclusion which is the exclusively foreign-owned enterprises increase can bring both advantageous and disadvantageous effect to China economy and industry. At last, the paper gives some advice to the government and enterprises on the countermeasures to the exclusively foreign-owned enterprises increase.