The Impact Of Fdi On The Chinese Manufacturing Market Structure

With the expansion of FDI in China and its market-share increase in each industry, whether or not FDI will monopolize China's industries has struck the attention of all walks of life in society. In 2006, China will end its transit period after its access into WTO. It's a must for China to be more open to FDI in wider areas. During China's economic transfer, FDI will exert its great influence on China's market structure in such areas as industrial organization's optimization, industrial development, industrial competition and industrial structure adjustment. Therefore, it's of great significance to carry out research on FDI's influence on China's market structure both theoretically and pragmatically. Since FDI in China concentrates on manufacturing industry, this dissertation focuses on FDI's influence on China's manufacturing industry. The content of this dissertation is as below.Firstly, it sets up an analytical framework to explain the mechanism of how FDI influences China's manufacturing market structure. It provides theoretical proofs for both the entry of FDI into China's market and its competitive advantages. This dissertation points out that FDI's influence on China's manufacturing industry's market structure has some special features. With the background that domestic market capacity is on the rise, these special features include the distinctive comparative competitive advantage of those FDI enterprises and the fragility of domestic market structure. In addition, this dissertation asserts that the entry of FDI leads to the change in China's system of ownership. And the change of China's system of ownership caused by FDI influence the market structure indirectly.Secondly, this dissertation makes analysis of both the ways of FDI's entry & exit and its competitive behavior to explain FDI how to influence China's manufacturing market structure. Different ways of FDI's entry & exit and different stock- right modes exert different influence on market structure. FDI's exit of the market can also cause the change of market structure. In the process of market expansion, FDI conducts such competitive activities as pricing, technical innovation, advertising and marketing. All the activities influence market structure. The change of market structure is a result of the combination of such factors as ways of FDI's entry and exit, competitive activities and other factors.