| The entry into WTO represents a new stage of China's economic reform and opening into the outside world, i.e. from a kind of selective liberalization to comprehensive liberalization, from experimental liberalization to legal based and accountable liberalization, from unilateral liberalization to WTO ruled based liberalization. It makes China's economy really integrated with the international system. As the size of foreign trade has become lager and larger (Total trade from 100 billion US dollars to 474.3 billion US dollars during 1986 to 2000, now the 7th world largest in merchandized foreign trade, and the 7th largest exporter, and 8th largest importer in the world.), China's FDI grows relatively so small and slowly (it is only about 2.87% of the total amount of Foreign Trade). Facing the new environment, both the government and the enterprises have to rethink FDI's role in the total economy, it's policy and strategy to keep a sustained growing speed. In the report of The 16th National Congress of the Communist Party of China (CPC, November 08, 2002), Jiang Zemin, pointed out that in response to the new situation of economic globalization and China's entry into the WTO, the nation should take part in international economic and technological cooperation and competition on a broader scale, in more spheres and on a higher level, make the best use of both international and domestic markets, optimize the allocation of resource, expand the pace for development and accelerate reform and development by opening up. Still, he said the government encourage those which have comparative advantages go abroad to conduct FDI.The purpose of this thesis is to find the basic motivation of FDI and try to answer "Why" should Chinese enterprises go abroad and "How" should they invest there.In the first part of this article, the evolvement of the FDI are described, and we can get to a basic conclusion that "Conquer(War)"---"Trade under Mercantile system"---"Free Trade"-----"Foreign Direct Investment "are the four major stages in it's evolvement history. The core of all these activities is the pursuit of "Profit Maximization" in both the national and private level.In the second part, All kinds of motivations of FDI are been introduced. The basic motivations of the FDI of western firms are: 1.Maintain and enlarge the export scale; 2. Maintain and develop it's monopolistic advantage; 3. Natural resource acquirement; 4. Cheap resource and Labor utilization; 5. Decrease the production cost; 6. Industry upgrade and transfer pollution. Meanwhile, according to the research by Ye,Gang, Haiyan,Zhangand D.Van Den Bulcke, the most four popular motivation of Chinese firms are "Market pursuit", "Resource pursuit ", "Technology pursuit" and "Efficiency pursuit ". And a comparison also be conducted between western firms and Chinese ones. The remarkable difference means china still in its beginning stage of FDI output.Some kinds of theories are explained in the third part. They are try to interpretwhy firms begin to conduct FDI instead of trade. Scholars get to different conclusions by applying different methods. And each of them have both its value and disadvantages.Based on the understandings of the basic motivations of FDI, the thesis put forward some suggestions about how Chinese businesses should establish their FDI strategies. Up to the early 1990s, "Made in China" was still a synonym of "cheap and simple processing" in developed countries in Europe and America, Now, one out of two air-conditioners on the international market is from China, at the same time, TV sets and washing machines made in China account for one/third and one/fourth respectively on the international market, people throughout the world are changing their previous views, in their experience of enjoying high-quality products, they have learned the brand-new implications of the term "Made in China". Accession to the WTO marks a new stage in China's opening to the outside world. China has experienced change from a limited range, domain and regional... |
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