The Entry Mode Choice Of Multinational Companies' Direct Investment In Chinese Automobile Market And Its Impact On Performance

With the declining of the American-European automobile market, the rapidly developing Chinese automobile market has attracted the entry of numerous multinational companies (MNCs). The choice of entry mode has become the primary problem to be solved by MNCs who want to entry into Chinese automobile market. It affects future performance in Chinese automobile markets, and it entails a concomitant level of resource commitment and the control of risk, which is difficult to transfer from one to another, especially from high level to low level. The choice of mode has become the focus of MNCs and many studies. Being such an important issue market entry mode choice became the object of numerous theories and models developed to understand and explain associated phenomena. Among these five basic approaches are particularly prominent and have been applied widely. But there still have three defects of these models:1) Failed to distinguish different modes of MNCs'foreign direct investment: Cross-Border Merger & Acquisition (M&A) and Greenfield investment; 2) Only suitable for the first choice of mode , failed to notice the dynamics of stock choice; 3) Have not joined the performance of investment in the frames of these theoretical models, so it can not distinguish the impact of different modes on the performance of investment . The point of this thesis is try to do some helpful studies on these issues, and will be extended in two fold: 1) Analysis the investment mode choice of MNCs with advantage who want to invest in developing country, on the base of multinational theory, organization theory and non-cooperative game theory. Analysis the main factors affect the choice of M&A and Greenfield investment, and the choice of stock by developing two models;2) develop a theoretical model of MNCs'choice of different invest modes when entry into Chinese automobile market, it will be on the base of Root(1994) and the characters of foreign market entry process. At last, we will use the case of Volkswagen to study the relationship between choice of investment mode and performance. To do this will be helpful for the investment mode choice of MNCs'entry into Chinese automobile market. By analysis the different situation of MNCs'mode choice, we make the result that MNCs tend to entry by M&A, and when the competition of domestic market is not so intense, MNCs will tend to merge more efficient domestic enterprises, which probably lead to monopolize. With the improving of MNCs technology transfer, the competitiveness distance between domestic and MNCs will become larger and larger. In order to be more independent, Chinese automobile enterprises need to strengthen its ability to absorbing knowledge spillovers. At the same time, Chinese Government should strengthen the supervision and management of merge too, enhance the existing merger policy, and strengthen its control of maliciously merge.