Entry Mode Of OFDI By Korea's Enterprises In China

After the establishment of diplomatic ties between China and South Korea in 1992,the South Korean direct investment in China(OFDI)increased dramatically.At present,China has become the largest investment target country for Korean companies.In the OFDI process of Korean companies,the choice of which entry mode to enter the Chinese market is an important decision it faces,which directly affects the success or failure of South Korean companies.Under this background,this article takes the entry mode of OFDI from South Korea to China as the starting point,and systematically analyzes the factors that influence the choice of mode.First of all,this paper uses the data of Korean enterprises in China solely owned by enterprises and joint ventures during 1998-2016,and analyzes the status quo of OFDI entry mode choice of Korean enterprises from China in terms of enterprises,regions and industries.The results show that wholly owned mode has been dominating,but with the change of Korean enterprises and China's domestic economic environment,it is being caught up with by joint venture.The question whether South Korean companies are wholly owned or joint venture mode choice model depends on the regional trend,enterprise scale,the trend of the industry development trend and market to enter Chinese,as well as the effect of global financial crisis in 2008.The above research provides the basis for full theoretical analysis.Secondly,based on the in-depth understanding of OFDI theory,theory of market entry mode,internal transaction cost theory of classical theory concept and development model based on the proposed hypothesis of this paper,that "enterprise factor","regional factors" and "entering the period" is the impact of Korean enterprises in China and the important entry mode of OFDI factor."Enterprise factor" is the source of capital and competitive advantage that enterprises rely on for "going global".The"regional factor" is the specific environmental guidance and competition target of the market,and the entry period is the key to decide whether an enterprise can enter the business successfully.In short,the main factors that influence the choice of Korean enterprises include the unique factors of the parent company or subsidiary,the unique environmental factors in the Chinese market and the opening time of the local marketing strategy mode.Thirdly,this paper aims at the theoretical hypothesis proposed in the previous article,and uses binary logit model to empirically test the factors affecting the OFDI entry pattern of Korean companies in China.The empirical results show that there are insignificant formations of "regional factors" and "entry period" variables.In stark contrast,the scale of enterprises in the "corporate factor" and the industrial division have a significant impact on the choice of Korean companies' mode of entry into China.The larger the scale of the company,the more it tends to the joint venture model.On the contrary,SMEs tend to have the sole proprietorship mode;Companies that tend to invest in service industries are more dependent on the market and the easier it is to choose a joint venture model.Finally,on the basis of summarizing the conclusion of the paper,the paper puts forward relevant policy recommendations,such as differentiated regional investment,diversified industry development strategies,investment risk reduction,reasonable investment strategy and guarantee system.