Foreign Direct Investment In Wholly-owned Analysis

Since the open policy was implemented in 1979, China has got great achievement in introduction of FDI. Regardless of the challenges and pressures suffered by government and native enterprises, Chinese overall economy has developed to a high level. Nowadays, more and more joint ventures change into foreign owned companies, this paper shows that the trend is the necessary step of global economy development and inevitable trend of FDI.Firstly, this paper uses abundant facts and figures to analyze the current situation and changes of foreign direct investment (FDI) in China ,mainly including three changes :Newly set-up foreign company increases; Mergers and acquisitions of Chinese companies increase; transform of joint-ventures into foreign owned companies increases.Secondly, this paper tries to find out the reasons from the macro and micro aspects: the macro part mainly includes investing environment and policies; the micro perspective is the major part of the paper, it uses classical theories such as monopoly advantage theory, effective management and dealing cost theory to illustrate the inevitable trend of increasing the foreign owned companies because of the existence of monopoly advantage, decreasing of dealing costs, implementation of effective management and global market competition strategy.Thirdly, it sets forth the dual impact on Chinese economy. Finally, the paper makes it clear that the domestic government and native enterprises have no better choice but following the trend. It suggests that both the domestic authorities and enterprises should carefully consider the negative impact of this trend and take effective actions to make full use of FDI.The main part of this paper is the second and third part, which are the reasons for the pursuit of sole proprietorship and the multiple influences.