Research On The Competition Between Multinational Corporations And Host Country Corporations And Its Market Pattern Evolution Under The Opening Process

Market Opening attracts lots of transnational corporations to invest directly and induces the market competition between translational corporations (TNCs) and host country's corporations (HCCs) as well. The basis of the competition between TNCs and HCCs is their comparative advantages which facilitate them to occupy a favorite position in market competition when two types of corporations take strategy which utilizes their own comparative advantages. Therefore, the competition between TNCs and HCCs also appears as the competition of their strategies. Following this idea, the paper sets up a strategy chosen model on basis of comparative advantages to analyze what kind of strategies the corporations will take to compete in the market. After theoretical analysis, we come to the conclusion that transnational corporations will choose technology advance strategy relying on their technology and focus on high extreme market; host country's corporations will choose cost advance strategy relying on their scale and focus on low extreme market. The behavior of corporations results a certain market structure with some characters. Therefore, the transformation of market structure is a regular process under the rational strategic competitions between TNCs and HCCs. Researching on the strategic competitions between two sides, the paper considers the market structure is a process of transformation between equilibrium and change and the market structure can be divided into two stages: Market equilibrium stage and market change stage. The market equilibrium stage is that TNCs domain the high extreme market and HCCs domain the low extreme market when both sides choose strategies on basis of comparative advantages. The market environment comes into being because the escalation of contradiction between the demand declination in the mature stage of product's life circle and the supple expansion due to the cost advantage strategy and leads to HCC's penetration into the high extreme market and the market structure moves into market change stage. In the market change stage, TNCs withdraw the manufacture of lower technology products and expand the manufacture of higher technology products. After border of high extreme market is redefined and the entrance barrier is reset, the market structure returns to equilibrium stage. In the long term, the gap of comparative advantages between TNCs and HCCs will decrease in the process of HCC's penetrating into high extreme market and TNC's creating a new high extreme market. At last, the two pattern market structure will disappear. The market goes to the full opening and market efficiency will be maximized. The HCCs take the international competitive power. After the establishment of theory, the paper uses the data from china color TV market to test the theory in the end. Through the theoretical analysis and the quantitative test, the paper gives some policy suggestion as follows; The Government should keep...