Emprical Analysis Of Factors Affecting FDI Manufacturing Enterpirses’ Performance

In recent years, the strategy of multinational investment in China has evolved fromthe original ways of joint ventures, cooperative ventures and equity participation intoabsolute holdings, even total foreign-owned. What does this trend imply? For FDIcompanies, does the ratio of foreign equity has an positive impact on corporateperformance? What are the factors that influence corporate performance?According to vast empirical studies, equity structure, capital structure, the size ofthe company and the ratio of foreign equity all may have influence on corporateperformance. But to what extent do these indictors influence performance? What’s therelationship between these indictors and a company’s performance? In order answerthese questions, we use panel data of recipient manufacturing firms over the period2007-2013in Shannxi Province to give empirical analysis.We mainly examine the relationship between the ratio of foreign equity, the size ofthe company, capital structure and corporate performance. To explore this relationship ata firm’s level, we firstly analyze the characteristics of foreign-invested enterprises usingSPSS17.0, then build a panel data model using Stata12.0.Through empirical analysis,we find that:(1) Foreign investment in the manufacturing industry in Shaanxi provincehas wide coverage. Foreign participation amount rising year by year, but there is a bigdifference for different companies to attract foreign investment.(2) Wholly-ownedforeign-invested enterprises and absolute holding companies had been a main trend inShaanxi Province’s FDI.(3)Generally, joint-ventures’ performance is better than whollyforeign owned. For joint-ventures, performance indicators rise with the increase of theratio of foreign equity, they start declining once foreign ownership reaches beyond acertain scope of50%and65%.That is to say, the two has an asymmetrical inverseU-shaped relationship.(4)Firm size has a positive influence on corporate performance.At present, the bigger size of Shannxi foreign-invested company, the better performancethe company will have.(5)The level of Liabilities has a negative effect on corporateperformance. Nowadays, foreign-invested manufacturing enterprises in ShannxiProvince have relatively sound capital structure. They have take advantage of thefinancial leverage to improve performance. If further expand the level of debt, corporateperformance will be reduced.