Research On The Choice Of Investment Areas Of Multinational Corporations' R&D In China

With the development of the globalization of the world's economy, transnational corporations are changing their strategies to invest their R&D all over the world instead of keeping their R&D activities in their home countries. As a emerging economy, China has fast growing output, huge markets, plenty of high tech engineers, well-developed infrastructure and friendly investment environment. Therefore, ever since the 1990's of the 20 century, China has become the first location choice of R&D investment for transnational corporations. According to the statistics from the Department of Commerce of PRC, the number of the R&D centers established by transnational corporations is increasing:The number was 1164 in 2007, compared with 24 in 1997, which in 2007 was 48.5 times that of 1997. Transnational corporations are setting up R&D centers overseas, which resulted from the global allocation of resources. Meanwhile, they bring us with up-to-date high technologies, well educated experts and a large pool of capital. This can upgrade the level of our technologies and stimulate China's economic development. MNCs'R&D investment can do better than their direct investments in improving our high tech industry. To sum up, it is meaningful to do some research on the factors that have influence on the location choice of the MNCs' R&D investment.Nevertheless, there are 31 provinces; they differ from the growth of the economic, quality of the population, investment environment, level of the infrastructure, etc. It is necessary for us to work out different countermeasures for the different areas of China based on their own situation.According to the review of literatures, I found the theme of my graduate thesis, that is:Research on the Choice of Investment Areas of Multinational Corporations'R&D in China.Trough the brief introduction of the current situation, including the main location of the MNCs'R&D centers, industry fields distribution, and the MNCs' home countries scatter, we have gain main ideas of the current situation related, and this will be helpful for further investigation. From my studies of the reference literatures, I find out three motivation types of MNCs'R&D investment, they are resource oriented, market oriented and technology oriented. Furthermore, I studied the influence factors worked out by predecessors. From all of the studies above, I sum up eight main influence factors in view of China's unique situation.From the above analysis, using econometrics models, I have found that there are four factors that have strong influence on the number of the MNCs'R&D centers, they are FDI scale, the number of the experts and scientists, the number of patents granted and per-capita wages.Finally, according to the outcomes of the analysis above, I work out some measures to be taken from the different perspective of the east and west areas of China.The approach of my dissertation is using theoretical analysis combined with empirical analysis.The outbreak of my paper is, it is the first to study the issue from the differences between the east and west areas of China. Because of lacking of enough knowledge and time, there are some short points in my paper. I will go on studying this issue for further study.