Study On Overflow Effect Of InDI In China 's Tertiary Industry

The OFDI of the China tertiaryindustry was proved to have explicitly technologyspillover effect. China has witnessed a rapid growth of OFDIsince2000. In2013, theflow of China OFDI reached107.84billion US dollar, an increasing to2012by22.8%,with the tertiary industry contributing to the majority proportion. The accumulatedOFDI of China tertiary industry was47.5billion US dollar in2013, a71.8%proportion of the gross volume in the same year. The tertiary industry catalog mainlycontains technology and knowledge intensive industries that were supposed togenerate themost technology spillover theoretically. However, China tertiary industrywas not found to have more significant technology spillover than the secondaryindustry. This paper analyzed the technology spillover effect of the China tertiaryindustry from current statistics, mechanism and influencing factors.Firstly, the study of the history and current overview of China OFDI statisticsillustrated that the tertiary OFDI was the largest part of the gross volume with a stablegrowth rate and an optimizing investor and host country distribution. But the gap wasexisting inside the industry that the technical investment was not sufficient. Secondly,a mechanism analyzing framework of technical innovation and spread was presented,based on the prime analysis, which can be used to interpret the generation, transferand spread of technology during the OFDI of multinational companies. Thirdly theinfluencing factors of the OFDI of China tertiary industry will be interpreted based onthe previous framework study. This part will contain the empirical outcome ofpreviousstudy, focusing on three levels, the host countries, the industry and theenterprise, and will involve qualitative factors besides the quantitative ones.The paper found that, as the technology gap between China and developedcountries is narrowing, the technical innovation mechanism is gradually becoming themain way of spillover effect. Meanwhile, an adverse political environment in bothmotherland and host countries is existing. In addition, the companies in the tertiaryindustry is lacking a technology absorbing capability. Therefore,incentive improvement and alteration should be implemented toboth macro politicalenvironment and enterprises’ multinational business operation. China governmentshould actively encourage companies in tertiary industry to outwards invest andimprove the domestic financial system, regulation and industrial standard.Multinational companies should ensure the outlay of human resource and R&D, fosterinnovation culture, strengthen operation control and build channels for internaltransfer of knowledge.