The Investment Motivation, Location Choice And Performance Of China’s Manufacturing Industry FDI

Foreign Direct Investment is firstly originated from developed countries, rather than developing countries. Now there are many multinational corporations from these developed countries which invest around the world. They have gathered much experience about how to invest directly in foreign countries. Which should be studied and referenced by developing countriesThis article summarized the theories of foreign direct investment in developing countries. As emerging economies, developing countries had developed rapidly both in quantity and quality in foreign direct investment, especially in1990s, and had an influence in some fields. Most of the foreign direct investment of developing countries focused on Primary Industry, such as Mining, Petroleum, Natural Gas etc. These investment aims at taking natural resources, well-known brand, advanced technologies or broadening market. Still there are many differences among these countries which we should learn and compare, so as to better support our own country. We choose India, Russia, Brazil, which is the member of BRIC, on behalf of the developing country. In the matter of universal pattern, we focusd on researching the period and characteristics of the investment in these developed countries. In the matter of experience comparing, we focused on researching the motivation and object of the developing countries.Since reform and opening up, our country firstly implemented as "attracting foreign investment", but with the development of economy, globalization, regional integration and the narrowing of domestic market, our country had gradually changed from "make ends meet" to "encouraged and support", and sometimes propose the strategy of " foreign investment". This article firstly summarized the background and the meaning of "foreign investment" strategy, then reviewed how the strategy has been practiced, mainly on the general characteristics of foreign investment, ownership architectural, domestic regional architectural, industry architecture. Thirdly we inductively researched the investment of leasing industry, business serving, financial industry, retailing industry, mining and manufacturing industry. Finally focused on the characteristic and problems of foreign direct investments of manufacturing industry, we summarized that manufacturing industry is continuously extending, more broadening in industrial distribution, mostly invested in domestic entities, invest mostly in HK and Southeast Asia, and the investment method is rising to diversification. Also there are problems such as less investment ratio of foreign direct investment, located at the low-end of industry chain, unreasonable region distribution etc.This article analyzed the motivation of foreign investment of manufacturing industry. With the poor technology, lowering trading prices and great volatility, we know we are exporting at a large number, but meanwhile we also imported at a large number from foreign countries, the trade structure is unreasonable, and the government encourages foreign investment. We use the Bayesian equilibrium to prove that, under the circumstance of owing cost advantage and capacity expansion, corporations aiming at maximizing market share will positively extend their market, until ding out the corporations aiming at maximizing profits, so as to finally own the market domination. In addition, the marginal cost of labor force in domestic countries is verging to extremes, which also promoting domestic manufacturing corporations to invest in foreign market, so as to enhance marginal output of capital.This article researched on location choosing of Technology Searching Style Foreign Direct Investment and Market Searching Style Foreign Direct Investment, and we have proved that Technology Searching Style Foreign Direct Investment always choose to invest in technology concentration areas, their choice of investment location is mainly impacted by the advanced degree of the host country, and is less impacted by the geographical distance and the market volume of the host country. As to Market Searching Style Foreign Direct Investment, their choice of investment location is mainly impacted by psychological distance, and less by geographical distance. As to corporations rich of resources, they will directly choose a high level foreign direct investment after a short period of foreign investment, that is to merge corporations in Western developed countries. Finally, foreign direct investment in our country is influenced by the national relationship, Sino-U.S. relationship impacts the Sino-U.S. foreign investment.Finally, we think the encouragement of foreign investment from our government had improved the trade structure and the long term trend of trade prices. Foreign Direct Investment has generally enhanced the technology level of Technology Searching Style Foreign Direct Investment corporations. When invest to search foreign market, domestic corporations tend to merge large multinational corporations of developed countries, but the result varies largely, some buyout has indeed extended the market, but some does not.