The Motives Of The Multinational Pharmaceutical Enterprises In China R & D Investment, Effects And Countermeasures

R&D, i.e. Research & Development, is a whole process that includes basic theory research, technology research, products development and marketing development. The Chinese mainland has become a hot spot to attract investment of medical transnational corporations in research and development in recent years along with the rapid economic growth and opening the outside world. A number of world-famous transnational medical corporations began to establish research and development institutes in China one after another.The paper analyzes the background, the traits, and the development trends of foreign-founded institutes of medical transnational corporations in China. It also reviews the theories about foreign-founded institutes of transnational corporations in research and development. One of them is the traditional FDI theories, such as the specific advantage theory, the product cycle theory, the internal theory and the eclectic theory of international production. The other is new theories, such as the strategic investment theory, the need- resource theory, the theory of R&D centralization and decentralization, the home-based exploiting or augmenting theory, and complimentary assets framework, etc.The paper analyzes the motivation of foreign-founded R&D institute in China with the need-resource theory. As a new emerging market, there are so many opportunities in Chinese medical market that the transnational medical corporations try to move in the Chinese medical marketing. There have a great potential of the demand of medicines and drugs with the rapid growth of economic and the total and aged population in China. On the other hand, the transnational medical corporations can take advantage of the Chinese better resources, such as the excellent and cheaper human resource, the low cost in research and development, the encouraged and preferential policies provided by Chinese government, and the plentiful Chinese medicine resource etc. At the same time, the paper analyzes the positive and negative influence on China by foreign-founded R&D institute. In the end, the paper gives some reference advice and suggestions to the government to face the challenge of foreign-founded R&D institute. The government should improve the investment environment by making proper policies. Moreover, the paper also gives what countermeasures Chinese medical corporations should take to improve their competence. It states that the Chinese medical corporations should make a full use of their own comparative advantage to take an active part in the global competition with the medical transnational corporations.