Research On Spillover Effects Of FDI In Chinese Automobile Industry

The study of FDI spillover has always been a focus of scholars.Through systematic research on FDI spillover effect of Chinese automobile industry,it can provide a good supplement to FDI theory.As one of the pillar industries in China,the foreign invest ment strategy of China's automobile market has been attracting more and more attention.China's auto industry started after the founding of the People's Republic of China,but the real development began with reform and opening up policy.After the third plenary session of the eleventh central committee,China began to actively integrate into the international market and introduced a large amount of foreign capital.In the automotive field,the policy of exchanging market with technology is implemented to promote the development of automobile industry.Foreign carmakers are starting to enter China through joint ventures with Chinese carmakers.China's auto industry has become the largest car market in the world in just 30 years.However,with the entry of foreign capital,the Chinese auto market is rapidly occupied by foreign enterprises.Domestic car companies have been severely squeezed,and the reliance on foreign capital is increasing.This situation not only inhibiting the innovation power of domestic car companies,but also poses a threat to the safety of China's auto industry.Therefore,in order to objectively evaluate the influence of foreign investment on China's automobile industry,it is very necessary to study the spillover effect of FDI.The development of China's automobile industry and the development stage of the joint venture enterprises are analyzed.The influence of FDI on China's automobile industry is analyzed.In order to carry out in-depth research,Some typical cases are selected from the automobile industry to carry out case analysis.the GMM method is used to measure FDI spillover effect of Chinese automobile industry,and the factors that can influence the spillover effect of FDI are analyzed.Finally,the following conclusions are drawn:First,FDI has a significant positive spillover effect on the development of China's auto industry,but the difference between the distance,the source of FDI and the absorptive capacity will have an impact on this effect.This paper uses the GMM method to analyze spillover effects of FDI to domestic enterprises,and finds that FDI has a significant positive spillover effect on the development of China's automobile industry.This conclusion is relatively robust and will not change because of the different TFP algorithm or the disturbance of individual variables.In order to carry out the robustness test,this paper first uses the LP method to calculate the total factor productivity regression,then uses the OP method to carry on the regression calculation,the conclusion still holds.Subsequently,the article added special economic zone factors,export factors,state-owned enterprises/non-state-owned enterprise factors to regress,and the conclusion was also established.The conclusion that FDI has obvious positive effect on the development of China's auto industry is robust.However,due to different distances,different sources of FDI and differences in absorptive capacity,FDI spillover effects will be different.First of all,when the distance is relatively close,the corresponding technology spillover effect will be stronger,and vice versa.Second,FDI spillover effects vary from source to source.Due to the institutional and cultural differences between Hong Kong,Macao and Taiwan and mainland China,the advanced management processes and technologies of Hong Kong,Macao and Taiwan enterprises are more easily learned and absorbed by mainland enterprises.This causes the product homogenization,the market competition increases.When the FDI from western automakers,western car companies and technology more advanced,the car companies on the mainland need more time to absorb transformation,there will be a long learning process,technology spillover effect would be larger whole.Finally,the differences in absorptive capacity also affect the spillover effects of FDI.The stronger the absorption capacity,the greater the technology spillover effect of FDI.Second,FDI spillover effect is highly correlated with the growth rate of FDI.The higher the growth rate of FDI,the faster the inflow of foreign capital,the less conducive to the development of domestic enterprises.Because of the existence of the technology gap,the domestic car companies' market share will shrink sharply,even withdraw from the market.Especially when the foreign capital at a rapid pace to enter the Chinese market,domestic automakers do not have enough time to learn advanced technology and experience of the foreign car companies,as a result,enterprises with foreign investment cooperation opportunities into a foreign client and no chance of joint venture may be pulling out of the market.Foreign capital is far more damaging to domestic car companies than the benefits it brings,and the domestic auto industry faces a general decline.And when the foreign capital to enter the Chinese market with relatively slow speed,the domestic car companies will have more sufficient time to study foreign car companies' advanced technology and management,can also be relatively easy to adjust the development strategy of the enterprise itself,through constant learning and accumulation,to enhance the strength of the domestic car companies,can effectively in face of competition from foreign car companies.Third,FDI has a certain negative impact on China's auto industry First of all,from the industrial level,the arrival of foreign enterprises is rapidly crowding out China's auto market,posing a threat to the long-term development of China's auto industry.For a long time,the Chinese car market was dominated by foreign companies.In recent years,although the domestic enterprises has developed,the market share has reached 40%.But the proportion is still low.At the same time,the share of China's domestic enterprises is concentrated in the low-end product market,and the profits are extremely thin.This has caused many domestic car companies to lose their own brands in the long term,relying on government subsidies and profits from joint ventures.On the contrary,foreign capital predominates in the high-end market,and gets a lot of profit.At the same time,foreign enterprises rely on its own scale advantage and start to increase its penetration into the low-end market.At the enterprise level,the auto parts market is more open and foreign investment is more serious.Many companies are being squeezed out of the market or pushed to the bottom of the industrial chain,where they are engaged in a small number of productive activities or OEM.However,due to the existence of the shareholding limit,the problem of extinction can be avoided.But the problem is also very serious.Fourth,FDI spillover effect is closely related to the automobile industry policy and the automobile enterprise strategy.When a better industrial policy in China,the technology spillover effect of FDI can be effectively guided,and the crowd out effect of FDI can be restrained.When in the presence of a large technological gap,the entry of the foreign capital is bound to be a certain impact for domestic automakers,lead to a drop in domestic automakers original market.Therefore,in order to protect the domestic industry,China has established a series of protective policies.The policy for the protection of China's own auto industry played a huge role.But these protective policies do not adjust actively.Along with the development of the industry,policy has become a tool to protect backward industries and backward production capacity.Resulting in enterprise has a strong dependence on government and policy,rather than a way to enhance their own strength.At this point,the FDI technology spillover effect will be much less,more is crowding out.When a company has a relatively reasonable development strategy,it can make a favorable choice for the spillover effect of FDI.The development strategy here is more about joint venture strategy and independent brand strategy.When enterprises face the joint venture,not technology to obtain,but just want to rely on foreign car companies' brand,capital and technology.FDI technology spillover effect will be smaller,the duration will be shorter and longer time to work will be crowded out.When the enterprise adheres to its own brand strategy and insists on independent innovation,there will be a significant spillover effect of FDI technology.In order to better reveal the research question,this article mainly use of normative research and empirical research,qualitative analysis with quantitative analysis method to study.The combination of the research contents and research methods have a certain degree of innovation.Compared with the existing literature,this paper focuses more on the combination of theory and specific industry.On the one hand,it combing the theoretical foundation,on the other hand,it is based on the theory to better understand the concrete phenomena in reality,so as to realize the organic combination of theory and reality.There are three major innovations:First,due to the particularity of FDI spillover effect,only with models to carry on the empirical analysis can only analyze the existence of spillover effects of FDI and an analysis of the causes of FDI spillover effect,cannot be further analysis of four channels of FDI spillover effect how to play a role.By using the method of quantitative analysis and case analysis,this paper analyzes the existence of FDI spillover effect,the causes of spillover effect and the channel of spillover effect.This has achieved a better combination of theory and practice,and has made a good supplement to the study of FDI spillover effect in automobile industry.Second,the analysis of the FDI spillover effect channel imitation-demonstration effect,is no longer a simple classification,but the dynamic description of time as the axis,divided into logic clearer three stages,namely simple imitation,additional technology imitation and comprehensive beyond phase,and typical representatives from Chinese car companies to display at the stage.Third,the analysis of the FDI spillover effect channel competition effect,this paper also does not have the usual methods,namely simple divided into positive effect and negative crowding out competition,but how to play a role in order to fully show the competition effect,on the basis of foreign investment in different time and different technical conditions,the competition effect is divided into three stages,namely extrusion stage,competition stage and comprehensive competition phase,but also to demonstrate China's automobile industry representative enterprises.The shortcomings of this paper: firstly,the data used in this paper is the data of China's industrial enterprises survey in 1998-2007,and there is no longer data analysis.Brandt et al.(2017)published articles in the American Economic Review,WTO Accession and Performance of Chinese Manufacturing Firms,and also adopted the data from 1998 to 2007.In order to make up for the lack of data,this paper adds case analysis to make up.Secondly,In analyzing the causes of China's automobile industry FDI spillover effect,because the data acquisition and difficulty index quantitative aspect,only the source of FDI,geographic distance and absorption ability are analyzed.Thirdly,when conducting case analysis,each part only selects a typical case for detailed analysis,lacking the summary statistics of similar cases,which may be one-sided.