Study Of The Development Model Of China's Foreign Direct Investment

As more and more multinational corporations choose to produce in transnational way for distributing limited resources efficiently. The company's ability to internationalize operating has become key element in international competition. On the other hand, companies begin to invest in the region where economic integration happened in order to avoid trade barrier and enjoy the effect of trade-diversion and trade-creation brought by regional integration. As a result, in addition to manufacturing and natural resources exploitation, foreign direct investment begin to focus on service industry such as finance, technological research and development(R&D), project contract etc. Thus it can be seen that it would not be able to meet the diversified need of international competition if we were to only depend on the export trade to participate in dividing the work in world range. Direct investing abroad to develop international market and exploit resource overseas actively has become the only choice to develop Chinese economy.Since opening up of China,we mainly fetch in capital, technology, and managerial experience on economic cooperation,a small amount of capital outflow focuses in trade or natural resources exploitation except for sporadic manufacturing investment. According to the current situation of Chinese economic development, shortage of capital has not been the main contradiction. Some industries, which have mature technology, have been capable of shifting to overseas market. It is important to build R&D department in developed countries, for our corporation's obtaining of advanced technology as soon as possible, which could form competitive advantage in international competition of 21st Century. At the same time, according to IMF the Report of World Economy Prospect, inflation rate has dropped to rock-bottom point within 40 years,which provide transnational investment with favorable economic environment; and world wide economic integration and liberalization of money market provide above mentioned investment with facilitate condition to develop. The external and internal conditions to develop direct investment abroad have matured. Research, which emphasizes development model of our direct investment abroad, not only complies with the objective request of "Go Abroad" strategy put forward by the central committee of the Communist Party, whose core is Comrade Jiang Zemin, but also has academic and practical significance for us to take part in global resource allocation and world economy globalization.This article refutes the idea that direct investment abroad is possible only when capital is overmuch. At the basis of analysis of theory and graph, usage of model and experiences of main countries which has direct investment abroad for reference, the article put forward the developmental model of Chinese direct investment abroad according to Chinese current situation and correlative rule. There are four chapters in this thesis:ChapterⅠ: the Necessities of Direct Investing AbroadPeople often think that only those countries which have surplus capital should invest overseas actively,or else export should be considered. However, by reviewing main foreign direct investment theory, we can find out that although the key standpoint of each theory is different from each other, all theories attribute transnational investment to the comparative advantages the company has not the surplus capital. On the other hand, Chinese foreign direct investment mainly comes from HongKong and Taiwan,account for 47%, not from European and America which are often considered to be capital wealthy. This can prove the idea mentioned above is one-sided. As far as Chinese current situation is concerned, expanding of direct investment abroad is profitable for developing international market, quickening adjustment of domestic industrial structure, increasing usable resource, improving ability to operate multinational corporation from realizing maximum wealth of shareholder, increasing technology innovation and extending product ci...