The Intra-Trade Price Of Foreign Funded Enterprises In China

After the Second World War, economic globalization and regional economicintegration has developed more rapidly. An open global marketing system is cominginto being. And lots of multi-national companies (MNC) have appeared which leadsto intra-firm trade. At present, intra-firm trade in the MNC has exceeded seventypercent. As a result, transfter pricing plays an important role in intra-firm trade. Chinahas opened its market further since taking part in the World Trade Organization, andmany MNC have entered Chinese market. This dissertation aims at foreign fundedenterprises in China to analyze the motivation of transfter pricing and whether thosecompanies make use of this way to transfer profits. At last some suggestions andproposals have been put forward for this phenomenon.This dissertation includes five parts: The first part is introduction. It has stated theproblems and given a document overview of intra-firm trade and transfer pricing. Atlast the research frame, method and routine has been made. The second partsummarizes the intra-firm trade and transfer pricing, including the definition ofintra-firm trade and relative enterprises, as well as the form, objective and decisionmechanism of transfer pricing. The third part analyzes the present situation of transferpricing of foreign companies in China. At first, it finds out that the main form ofintra-firm trade in China is to export to their mother countries. Then it illustrates theforeign companies in China exist transferring profits through transfer pricing. At last amodel is built to estimate the profits transferred in the distribution part. The fourthpart analyzes the motivation of transfer pricing. It can be divided into two kinds: taxincentive and non-tax incentive. This dissertation focuses on tax incentive. At last ithas given a solution to solve the problems of transfer pricing: to complete the relativelegislation of transfer pricing and improve the tax management.