Research On The Difference Of Transaction Efficiencies Of Areas And The Behavior Of Enterprises Relocation

Under the background of global economic depression and recovery, the production distribution of manufacturing enterprises in China is being adjusted. On the one hand, a large number of the export-oriented manufacturing companies in east coastal region go bankrupt, and many low-tech enterprises transfer to the Midwest China or Southeast Asia. On the other hand, large companies with great market power are actively expanding international markets and relocating their headquarters. In the new economic environment, it is quite necessary to probe into such issues theoretically as how to measure the impact of enterprise relocation on China's industrial structure, how the corporate relocation affects the economic performance, how to choose the target areas of corporate relocation, and also the relationship between corporate relocation and enterprise upgrading. My basic opinion in this paper is that, in order to pursue maximum profit, firms migrate to the place where its economy has higher network effect of division of labor. Suppose the transaction efficiency of areas is constant and the prices of product factors are fixed, firms, guided by market, will relocate at the their best places and at the same time realize the pareto-efficient distribution.Most previous researches focused on analyzing the relocation incentives and influencing factors, while lacked the economic performance of relocation. This paper, from division perspective, mainly studies the relocation of plants and headquarters and the economic performance separately, by introducing the theory tools of transaction efficiency and the network effects of division instead of scale economies. Going a further step, this paper sorts out the relationship between transaction cost and transaction efficiency, and then gets the economic meaning of transaction efficiency and the role it plays in the relocation. Based on above analysis, I find that the production sector relocation is the result of balancing the tradeoff between production costs and transaction efficiencies of production factors, and it is the cost transaction efficiency that ultimately determines the migration behavior of plant. In the following part, this paper, using factor analysis, evaluates the transaction efficiencies of 31 provinces of China mainland, and further educes the cost-transaction efficiencies. Meanwhile, the relocation behavior of corporate headquarters is relative not only to transaction efficiency of high-tech factors and the short-term profit function, but also closely to the enterprise upgrading, whose process has been described with the path of headquarter relocation in this paper. Finally, through the data examination, I find the hypothesis raised in this paper can well explain the general features appearing in the relocation of Chinese enterprises.