Research On Internal Transfer Pricing Of Enterprise Group

With the development of economic globalization, in China More fierce development oflarge enterprise groups, how to work out the transfer pricing to become a large enterprisegroups in China is a serious problem for the development of enterprise groups. Fromoutside the Group, the appropriate transfer pricing can avoid transmit of error messages andreduce investors’ unnecessary losses without earnings manipulation.From the internal ofGroup,it can avoid wrong judgments management layer and improve the efficiency of theinternal control of the enterprise group, incentiving sector’s initiatives. Accordingly,formulate appropriate transfer pricing mechanism is an important element in theestablishment and development of enterprise groups. To watch domestic and foreigncondition about transfer pricing mechanism, a lot of researches have been made from thetheoretical and empirical and some important theories and methods have appeared.This paper adopts literature review method, elaborates the basic theory on transferpricing, puts forward and analyzes the factors affecting the transfer pricing mechanism,which focuses on the analysis of enterprise groups, considering the transfer pricing groupitself, competitors and consumers of the strategy in the presence of external competition,and with the help of demand theory and game theory, reference Hotelling price competitionmodel, obtains the enterprise demand function in the presence of external marketcompetition, and the application in the enterprise transfer pricing, consumers on productpreferences to be quantified, that in this case the pricing strategy of enterprise groups.Considering the internal organization of environmental groups, the organizationenvironment with the current transfer pricing practice is divided into four types, the transferpricing strategy suitable for each type of external competition degree. Finally, according tothe theoretical analysis applied to the actual case, and put forward reasonable suggestionsfor transfer pricing strategy.