The Entry Mode Choice Of Transnational Service Firms In Chinese Market

With the deepening of economic globalization and restructuring of international industrial structure, service industry, the fastest growing industry for decades, has surpassed manufacturing industry and become the most important sector of foreign direct investment (FDI). Especially in recent years, most of the countries in the world have been taking actions to be more open to foreign service supplier, which makes service improving steadily. Moreover, trade and FDI in service have been increasing on a large scale, and there comes a growing tendency for service to shift internationally. Thus, the internationalization of services has become one of the tendencies for the development of the global service industry. After its entry into WTO, China has adjusted a lot in the foreign investment of service. As China fulfills WTO commitments step by step, it also enlarges the service market access to give foreign investors national treatment, which is the core of the adjustment of foreign investment policies.The entry mode choice is an important strategic decision for companies engaged in internationalization. When multinational corporations (MNCs) determine to operate transnational, they have to make at least two important strategic decisions: one is the location choice, that is, to choose which foreign market; the other is the entry mode choice, that is, to invest directly in host countries, enter by signing contracts, or choose the original export. These three different entry modes have a different and important effect on multinational corporations and the host countries. Thus, entry mode choice has always been an important research subject of international operation.Based on the background of gradual opening of China's service market and shift of international service, this paper has international trade theories and international direct investment theories as its base and entry mode decisions on international market as its core. This paper makes a theory study on entry mode of overseas market to show the determinants of entry mode decisions of service companies, and then puts forward a proposal for China to make effective use of foreign investment. The concrete studies can be summarized as follows: (1) Based on sorting out and evaluating literature on service internationalization, this paper elaborates on theories of entry mode choice of international market, analyzes the intrinsic characteristics of different entry modes and the determinants of entry modes for service corporations, from which we arrive at the general analytical framework of entry mode decision of service corporations operate in international market. (2) Based on the description of current situation about transnational service corporations entering China, analyzes the features of these transnational service corporations' entry mode choice, and indicates the trends of more corporations choosing wholly owned modes, and combining the analytical framework to explain the reason. (3) Shows the negative influence the trends bring out when transnational service corporations entering China, at last gives some advices for Chinese government and service corporations.