Analysis Of Causes And Trends Of The Divestment Of Multinational Corporations In China

Since the opening up of China in 1979, TNCs have started their investment in China again. After nearly 30-year development, especially the entry to WTO, China's investment environment has seen obvious changes. On one hand, some TNCs have expanded their investment. However, on the other hand, divestment also begins to appear in China.This paper focused on the motivations and tendency of multinationals'divestment in China. The first part has introduced 6 fundamental theories on both TNCs overseas investment and divestment. Before analyzing the motivations of divestment, the paper has listed 3 main comparative advantages. Based on the previous content, part 4 has analyzed the reasons why TNCs withdraw their investment in China. There are mainly two motivations: first, changes in domestic market, including the oversupply in some products, the fierce competition and gradual adjustment in FDI policies; second, international market also pose some challenges, like the economic depression in the home countries, and the competition from other countries. Considering the characteristics of those withdrawing companies, the paper forecasted 3 tendencies for the divestment in China: manufacturing will constitute a large part of divestment, small and joint ventures are more inclined to withdraw their investment.