With the acceleration of the process of integration of the world economy and dramatic changes of Chinese domestic political and economic environment, Chinese firms carry out foreign direct investment (FDI) actively. FDI activities have been concerned ...
With the acceleration of the process of integration of the world economy and dramatic changes of Chinese domestic political and economic environment, Chinese firms carry out foreign direct investment (FDI) actively. FDI activities have been concerned by the government and firms. Integrated systematic study on Chinese outward FDI is relatively insufficient.
Therefore, based on the reference to the extensive literatures, this conducts a comprehensive study on the motivation of Chinese outward FDI and the relationships among influencing factors, entry mode, and business performances. This suggests the integrated research model on the relationships, in addition of institutional and political factors based on international production eclectic theory model.
The data collected from outward-investing Chinese firms in Jiangsu province was analyzed by using computer statistical package SPSS 19.0 of reliability test, factor analysis, and correlation analysis to verify the reliability and the validity of the measurement question. Lastly, regression analysis and T-test were used to test the fitness of the theory model and the hypotheses.
Result of the analysis verify that 1) Chinese firms prefer Market-oriented investment motives than other investment motives during the process of foreign direct investment, 2) The main affecting factors of entry mode of Chinese outward FDI are as follows: R&D capability, marketing capability, Production capability, Host-market size and chinese government promotion. That is to say, with the improvement of such capacities, Chinese firms will give priority to select Wholly-owned subsidiary(WOS) than Joint venture(JV), 3) Corporate R&D capability, productivity capability, country risk and the Chinese government's institutions have a positive impact on performance, 4) Investment in developed countries or developing countries is effective on performance.
According to the research results, the provides some recommendations on foreign direct investment to Chinese firms and government. 1) Firms should choose proper entry mode according to their competitive advantages, wholly-owned subsidiary is a more viable option to create profits when entering large potential market. Moreover, Firms should pay attention to the changes of government policy and institution. Lastly, Firms should carefully consider the factors that have a positive impact on investment performance. 2) The government should be more supportive for foreign direct investments while further relax the audition and supervision policies on FDI.
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