Research On MNE'S Investment Modes Of Entry Into China

On the condition of economic globalization, more and more corporations organize their production and circulation activities through the whole world. Generally, MNEs are free to choose their mode of entry into foreign market with the entry modes of foreign direct investment (FDI), export, and technology transfer being the most common. MNEs' choice of entry modes into foreign markets has significant influence on their economic performance. From the side of host countries, increases of international investment and international trade resulted from MNEs' entry have been proved to be the "engine of economic growth"(UNTCT, 1992). Meanwhile, MNEs have vital influences on the host countries' and even global industrial structural adjustments. Due to MNEs' important roles, every government in the world takes various measures to attract MNEs. Therefore, research on MNEs' entry modes would be significantly meaningful, especially for developing countries like China to keep attraction to MNEs.Based on analysis of MNEs' foreign direct investment, this paper firstly discloses the changes of MNEs' modes of entry into Chinese market, and analyzes the implicated factors influencing them. Secondly, the paper evaluates the foreign trade effect and technological effect of FDI into China. On the basis of these, the paper forwards corresponding strategic adjustments aiming to bring more MNEs into Chinese market.According to data offered, there are basically three changes of MNEs' investment modes including modes of corporation establishment, ownership structure choice, and location choices. Positive analysis on these changes constitutes the main content of this paper.The hypothesis test and regression analysis results indicate that such factors as China's industrial distribution growth rate, MNEs' operation period, international operation experience, and region allocation of products distribution have significant influence on MNEs' investment modes of corporation establishment; Such factors like industrial growth rate, region growth rate, scale of foreign-funded enterprises, cooperation period, and the ratio of advertising expenditure to sales have significant influences on MNEs' investment modes of ownership structure choice; In reference to MNEs' location choices, the factors of infrastructure development and economic development prove to have significant influences on it. Meanwhile, MNEs' investment on China proves to have positive influence on Chinese foreign trade. Besides all above, the paper also conducts qualitative analysis on MNEs' effect of technological promoting. Lastly, based on the above analysis, the paper forwards corresponding suggestions on strategic adjustments involving accelerating MNEs' merger and acquisition (M&A) investment, opening China's capital market aiming to cope with MNEs' ownership structure adjustment, strengthening guide by government to cope with MNEs' agglutination trend, promoting structural optimization to improve inward FDI's foreign trade effect further, and impelling MNEs' technological transfer by strengthening intellectual property protection, aiming to cope with MNEs' localizing their research and development (R&D)activities.