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Direct Investment By Multinational Companies In China Motivation

Posted on:2005-01-11Degree:MasterType:Thesis
Country:ChinaCandidate:Z X CuiFull Text:PDF
GTID:2206360122986046Subject:International trade
Abstract/Summary:PDF Full Text Request
Since 90's, multinational companies, especially a batch of famous multinational companies started their large-scale investment in China. China always has been a developing country who has been drawing most amount of direct investment from outside companies, and has become the second biggest direct investment host country of outside companies in the world, only next to the United States. The direct investment of multinational companies has not only brought China the funds modernization development need, but also optimized Chinese industry and product structure. According to investment motivations, the multinational investment can be primarily divided into five types. The first type is the investment motivation of high profits; the second type is the investment motivation of resources guidance; the third type is the investment motivation of market guidance; the forth type is the investment motivation of the efficiency guidance; the fifth type is the investment motivation of global strategy. The investment of market guidance is the common investment way between developed countries. The investment of resources guidance refers to that the enterprise carry out its foreign direct investment to seek the steady resource supply and make use of cheap resource. Taking the oriental technologies factor as the competitive advantage, parent company transfers technologies to sub-company in the host country. A majority of them are the developing technologies including some highly sophisticated technologies. China often runs up against these technologies difficult to be solved in its economy development.Along with Chinese economic development and its penetration of reform and opening, the multinational motivations are gradually changed from the direct investment of resources guidance to the direct investment of market guidance.This article is put forward its thesis just on this background. Combining theory and practice, this article give some research and analyse on the direct investment of resources guidance and the direct investment of market guidance in China.This article is divided into five parts altogether. As a foreword, chapter 1 introduces the purpose, method and structure of the article and the changing necessity of investment motivations in China recently. On the basis of the method "theory-history-case", I give my research work on investment of multinational company in China. Chapter 2 discusses the concept of multinational company and international direct investment, the principal theory of multinational company and the special theory of developing country, points out the most suitable environment of direct investment in various countries. It also discusses the latest developing trend of the theory of multinational company. Among with them, what directly related to the investment motivations are the turning interior theory of microcosmic part and the miniature technology theory of macroscopical part. The assumed premise of the interior theory is that enterprise drive the operation objective to maximize profits under the market condition of the imperfect competition. Considering the motivation of turning interior, enterprise is frequently willing to put the market into practice of turning interior because of the faulty market. But motivation of enterprise putting the market into practice of turning interior is closely related to product quality and relevant market structure. Turning interior could not only prevents technology superiority to be lost and avoids probably arising competitors because of knowledge asset to be sold but also provides a huge space of given superiority for the enterprise. The American economist Louis.T.Wells put the miniature technology theory in his article "Internationalization of developing country enterprises" in 1977. The competition superiority of multinational company in the developing countries can be shown in three aspects: First, a multinational company has the labour-intensive miniature production technology that could supply services for a small market. One of th...
Keywords/Search Tags:Multinational
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