Market Environment Of Host Country, Performance And Divestment By Multinational Corporations From China

The rapid development of China's economy has continually improved the level of productivity in China,while also cultivating a consumer market with great potential.Affected by economic development,open policies,potential markets and other factors,a large number of multinational companies choose to invest in China.In this context,the phenomenon of multinational corporations withdrawing capital from China has also increased.Although the reasons for divestment are very different,the adverse effects of multinational corporations' withdrawal of China on China's economic development,industrial structure,employment and international trade are inevitable.Recognizing the significant impact of foreign divestment on the host country,it is possible to more clearly understand the importance of the research on related papers.For China,to reduce the impact of multinational corporations on China's divestment,it is first necessary to understand the reasons for the divestment of multinational corporations.Only on the basis of clear reasons for divestment can we adopt corresponding policy measures.At present,in the theoretical research field of multinational corporations' divestment,some scholars have introduced the concept of institutional distance,trying to explain the disadvantages of multinational corporations' operation and the reasons for divestment from the perspective of large institutional differences between the investor country and the home country.Most scholars combine institutions with culture or consumption habits,and believe that the system has been formed for a long time.It is a social constraint that most people accept and apply.It mainly emphasizes the institutional differences in the governance of enterprises,and believes that enterprises should comply with the system.Have to survive.This paper also introduces the concept of institutional distance in the study of divestment,but at the same time it also recognizes the support of the system,and believes that enterprises can promote the sustainable development of enterprises through the effective cooperation of the system and their own resources.Therefore,this paper combines institutional theory with resource-based theory to explore how multinational corporations can obtain competitive advantage by rationally allocating corporate resources under the institutional pressure of the Chinese market,reducing the occurrence of divestment from the strategic level of enterprises,and avoiding the mismanagement.The divestment has caused adverse effects on the host economy and multinational enterprises themselves and the occurrence of a double loss situation.The divestment of multinational corporations has become a common phenomenon.Through the research,this thesis concludes that when there is a large institutional distance between the host country and the home country of multinational corporation investment,the choice of investment timing has a correlation with the corporate performance of the subsidiary.However,multinational companies that enter the host country market are more likely to choose to divest because of poor performance in the host country due to lack of first-mover advantage.For multinational companies,after determining their investment intentions,they should choose the right investment opportunity and appropriate business strategy to gain a competitive advantage in the host country market.For the host government,adhering to the adjustment and upgrading of the domestic industrial structure and actively guiding the investment behavior of multinational corporations in the country will enable the introduction of foreign capital to better promote the sustainable development of the domestic economy.