Multinational Companies To Enter China's Market Structure Effect Study

With the rapid development of global economy, status and function of large enterprise or enterprise group is shown out obviously. As China implements reform and opening-up and entered into WTO, the relationship between economy of China and the whole world is closing. Multinational corporations are becoming the major factor that influents China's growth of economy.This dissertation based on theories of F.T.Knickerocker and E.M.Graham analyzes the reasons of TNCs' entry of China and draws a conclusion that entry of TNCs can have a certain effect on the mother country's market structure with the market concentration and barriers to entry. The empirical results are accord with the conclusion of the theoretic model. It can be propitious to providing the theoretic base and empirical proof for the establishment on the policy of TNCs in our country. In the first part, the angle and the significance of this dissertation are pointed out. In the end of the part, literatures related with market structure and TNCs are summed up, included the researching evolution of the scholars in China. In the second part, a game theory matrix and a leader's model are given and a proposition of the relationship between entry of TNCs and market structure is educed. Combining the China's practice, with more and more TNCs entering China, it will accelerate change of market concentration and barriers to entry and meanwhile can influence market conduct and performance since market structure can have influence on them. Though analysis to the model, we can draw a conclusion that monopolistic market structure has not only negative effect, in order to protect workable competition and to enhance efficiency, it is necessary to found an oligarch-leading market structure with moderate intra-industrial concentration and sufficient competition between enterprises.In the third part, the emphasis is put on the description of the market Competition behavior in China as a whole. From the gross point of view, although China economy is being in the changing period, the enterprise behavior is under the influence of government factor seriously which is much different with western countries, there are still some characteristics of mature market economy in some industries with vigorous competition and high concentration, e.g. Household appliances and Auto industry.The forth part focuses on the empirical analysis of effect of TNCs' entry to Auto industry to test the conclusion of the model in part two. The outcome is showing: market concentration of Auto industry has shown obvious up-trend as a whole, same with the trend of global market, at the same time, industry scale efficiency is increasing slowly. At last, the dissertation discusses the policies and suggestions. It gives some advices on how to attract TNCs to meliorate and optimize market structure and make suitable industry policy.