A Study Of Chinese Service Industry In The Context Of Foreign Investment Entry-mode

At 21st century, the increasing Foreign Direct Investment (FDI) flowing into service industry presents the sturdy trend of service firms' internalization. China has promised to open the service industry gradually when she entering into WTO. Since 2001,more and more multinational service companies enter into Chinese service market, ranging from financial service, logistics, telecommunication to law service, accountancy, management, public relations as well as other business service industries. The analysis on the competitiveness of Chinese service industry shows that the total level of Chinese service industry is behind schedule, especially in knowledge-intensive services. Therefore, FDI must be ushered in order to accelerate the development of Chinese service industry.Entry mode is the systematic arrangement and distribution of products, capital, technique, know-how and other resources that entering into foreign markets. The entry mode choice is an important task in the transnational company's globalization strategy, as well as an important international marketing strategy. Nowadays, the trend of international services transferring to china is quite obvious. China has become one of the most potential nations that attracting service FDI. The entry of foreign service firms has various impacts on China. Chinese service industry will be further opened after WTO and some restrictions on the shareholdings will be abandoned. There is an inner driving force that pushes the multinational service companies to gain the control, for most of them are quite powerful in ownership advantage. Compared wholly owned foreign subsidiary with the joint venture or cooperated company, the latter one has much more positive effects to the host country, for it can attract experiences, knowledge and know-how from the foreign cooperator and enhance the competitiveness of its service industry.In the context of international service industry transferring into China and the deepening open of Chinese service industry after China's entering into WTO, based on the theory on international trade, international investment and service marketing, the essay aims to build up a general analysis model for entry mode choice of service firms. After making differences of tangible products and services, this study examines the factors that influence the entry mode choice of service firms. In addition, the essay has disclosed the feature of foreign service firms' entry mode choice in China. In short, the essay strives to solve five basic questions as follows, which are concerned with both theory and reality: (1) why it is necessary to do research on the service firms' entry mode, and what's the supporting theory and realistic one based on the subject. (2) What's the drivingforces for service internalization and the respective characteristics between service and product? What's the variety and feature of the entry mode for service firms? (3) How the route of service firms making decision on entry mode and the feature of service firms' entry mode choice in Chinese market? (4) What's the influence to the development of Chinese service industry while more and more foreign service companies entering into China? (5) How to analyze and guide Chinese service industry to make good use of foreign investment as well as accelerating its development by considering the characteristics of foreign service companies' entry mode Choice.It includes the specific research contents as follows: (1) It forms a theory structure after analyzing the documents of service companies' internalization, the different globalization approach between service companies and manufacturing companies, as well as the implementation of entry mode theory. (2) It tells the inner need and driving forces for the act of service internalization and the variety entry mode of service companies, especially the difference in entry mode between service companies and manufacturing companies. (3) Furthermore, combining with the open degree and open promises of China entering into WTO, it forecasts the trend of service FDI in China. (4) Using the Grey Systematic Evaluation Method and with the consideration of service product, the company's unique ownership advantage and the host country's environmental factors, a general model for service firms' entry mode choice is developed. (5) Taking the foreign companies entering Shanghai in 2001 as samples, it investigates the characteristics of foreign service companies' entry mode choice. Besides, using Crosstabs correlations and regression method, it examines the important factors that affect the foreign service companies decision making on entry mode. (6) Based on the TC index, the proportion of international market sales volume, it evaluates the competitiveness of Chinese service industry. Then, it investigates the positive effects of service FDI to China, especially the foreign modern producer service firms' positive effects on technology diffusion and innovation, and the challenge of FDI to Chinese service industry is discussed. (7) Finally, in the context of the transition of international service industry and the deepening openness in Chinese service market after WTO, it studies the effective principle for utilizing service FDI and the emphases of government control to service industry. In addition, it puts forward the countermeasures for using foreign service investment to accelerate the development of Chinese service industry.