Analysis On Foreign Enterprises Divestment In China

With the increasing of the international investment and the changing of invest environment, the phenomenon of divestment is increasing day by day. Divestment brings a series of negative influences, as the host country, we can't the put an end to divestment completely, but we can avoid it by adopting some measures furthest.This article begins with the theories of divestment from domestic and abroad. Then it analyzes the status of divestment in China and the effect to host country, finding that most of the enterprises which had divested from China are the labor-intensive, exported-centered, minor enterprises and located in the cities around BoHai Sea; influences of divestment is generally negative, but we can see that most divestment firms are high-consumed and high-polluted labor-intensive firms, divestment of this kind of foreign firms is the result of the industry improvement and the result of survival of fittest as the developing of market economy. Then it comes to the core part of this article: studies on achieving process and causes of divestment. After studying the process of divestment, finding that the government do or not do will affect the divestment decision of foreign firms, that is, if the host country adapts some measures during the process of negotiation, the foreign firms may choose to stop divesting; it adapts the measures of qualitative analysis and quantitative analysis to analyze the causes of divestment in detail, firstly establishes a multi-linear regression model and then test the result according to cases analysis. Finally, at the basis of these causes, it mentions some feasible measures such as strengthen the government and media agency's functions to prevent divestment.