The main forms of foreign direct investment in China are Sino-foreign joint ventures, Sino-foreign cooperation and wholly foreign-owned, that is, the organizational form of "foreign-funded enterprises". With the development of China's economy, foreign direct investment presents new characteristics and development trends. Judging from the changes in the ownership structure of foreign investment, the proportion of these three ways has changed greatly: from the 1980s to the first half of 1990s, the establishment of joint ventures has been the main way of foreign direct investment; However, since the mid-1990s, there has been an obvious trend of "sole proprietorship" in China's foreign direct investment, and wholly foreign-owned enterprises have gradually replaced joint ventures and become the main way to utilize foreign direct investment in China. This is mainly manifested in the following three aspects:
(A) the number of newly established wholly-owned enterprises increased
Among the newly approved foreign direct investment enterprises, the proportion of wholly foreign-owned enterprises has greatly increased, which has become the main way to utilize foreign capital. Since 1990s, the number of newly-established wholly-owned enterprises and the proportion of investment in utilizing foreign direct investment in China have been on the rise. From 65438 to 0997, the number of wholly-owned enterprises in newly approved foreign-funded projects in China began to exceed the number of joint ventures; 1998, the proportion of wholly foreign-owned enterprises (4 1.8%) in contractual foreign capital exceeded that of Sino-foreign joint ventures (33.2%) for the first time, and became the main way to utilize foreign capital in China. Since then, the proportion of wholly foreign-owned enterprises has been growing rapidly, from 65,438+410.8% in 1998 to 76.4% in 2004, which greatly exceeded the share of Sino-foreign joint ventures and Sino-foreign cooperative enterprises, and became the main way to utilize foreign capital in China. In 2004, the number of newly established wholly-owned enterprises was 2.7 times that of joint ventures, and the contractual investment of foreign investors was 4.2 times that of joint ventures. The actual usage reached 2.5 times. Moreover, in 2005, the proportion of foreign capital actually utilized by wholly foreign-owned enterprises was 67.33%, which greatly exceeded the proportion of 22.90% of Sino-foreign joint ventures.
(2) the equity expansion of the original joint venture
While the number of newly approved wholly-owned enterprises and the amount of foreign capital exceed those of joint ventures, the original joint ventures have also accelerated the pace of restructuring and gradually transformed into wholly-owned enterprises. At first, multinational companies became major shareholders of joint ventures by increasing capital and shares. After 200 1, with the adjustment and liberalization of policies, many multinational companies began to convert joint ventures into wholly-owned enterprises by purchasing Chinese shares in joint ventures.
200110/On October 23rd, Alcatel acquired 50%+ 1 shares of China and gained control of Shanghai Bell. In August 2004, the famous Beijing International Exchange System Co., Ltd. (BISC) announced its name change to Beijing Siemens Communication Network Co., Ltd. (SCNB). Siemens' shareholding ratio increased from 40% to 67%, and the nature of the enterprise changed from a joint venture company to a foreign-owned holding company. June 5438+1October 65438+February 2005, Konica Minolta announced the establishment of 100% wholly-owned investment management company in China and the establishment of a wholly-owned manufacturing base in Wuxi.
(3) M&A of domestic enterprises
A new trend after China's entry into WTO is that multinational companies enter the China market through acquisitions and mergers. For example, Emerson of the United States spent $750 million to acquire AXA Electric, a subsidiary of Huawei; American AB Beer Company acquired Tsingtao Beer; France's Danone company holds Robust and Wahaha, which is rare in the past. Entering the China market through mergers and acquisitions and setting up holding or wholly-owned enterprises can shorten the investment cycle and reduce risks.
The above facts show that the development of foreign direct investment in China has shown a trend of "sole proprietorship", and wholly-owned enterprises will become the main form of foreign direct investment in the future. The aggressive development of foreign-funded enterprises should arouse our sufficient vigilance and attention, which requires our calm thinking and analysis.
Then, what is the reason for the change of foreign investment mode, especially the sole proprietorship mode? For a long time, there have been different opinions about the reasons for the sole proprietorship of foreign investment in China, but the author believes that all these can be attributed to the category of transaction cost in economics, and the reduction of transaction cost is the main reason for the tendency of sole proprietorship of foreign investment in China.
Second, an overview of transaction cost theory
Transaction cost, also known as transaction cost, is the core of property rights economics, and "the comparative institutional theory of economic organizations is studied with transaction as the basic analysis unit". 1937 Coase, a professor at the University of Chicago Law School in the United States, pointed out in the article "The Essence of Enterprises" that "the main reason for establishing a profitable enterprise seems to be that there is a cost in using the price mechanism. The most obvious cost of "organizing" through the price mechanism is that with the emergence of professionals selling such information, this cost may be reduced, but it is impossible to eliminate it. The cost of negotiating and signing transactions in the market must also be taken into account. " Coase only put forward the viewpoint of "transaction cost" and did not directly mention this concept.
Since Coase, Williamson has systematically improved the transaction cost theory. Williamson believes that transaction cost is "the price or cost that the economic system needs to pay". The transaction cost is divided into the cost before the contract is signed and the cost after the contract is signed: the transaction cost before the contract is signed refers to "the cost of drafting the contract, negotiating the contract content and ensuring the contract performance"; The transaction costs after signing the contract are as follows: (1) unsuitable costs; (2) transaction costs; (three) the establishment and operation costs; (4) Capital preservation. Williamson believes that we should study enterprise behavior from the perspective of contractual relationship. He pointed out that "any problem can be treated directly or indirectly as a contract problem, which is very useful for understanding whether it can save transaction costs." Williamson explained vertical integration from the perspective of saving transaction costs. There are two important assumptions and three trading dimensions in his analytical framework. Two important assumptions are "bounded rationality" and "opportunism", and three transaction dimensions are asset specificity, uncertainty and transaction rate. The three transaction dimensions determine the transaction cost, and the transaction cost determines whether the enterprise chooses vertical integration.
Thirdly, based on the transaction cost theory, this paper analyzes the reasons of foreign sole proprietorship.
(a) the specificity of technology or assets
For the explanation of sole proprietorship, transaction cost economics puts forward the concept of asset specificity. According to Williamson's definition, the so-called asset specificity is the difficulty of reconfiguring the assets that have been put into production. Asset specificity is actually a measure of the dependence of an asset on the market. The stronger the asset specificity, the higher the market transaction cost, that is, the transaction cost is a curve that rises rapidly with the enhancement of asset specificity. On the one hand, one party may use the trust of the other party to avoid, hitchhike or abuse technology. On the other hand, some technologies are the core technologies, unique technologies or sales know-how of foreign enterprises, and they are the core capabilities of enterprises to gain long-term competitiveness. Foreign parties do not want others to share their know-how or technology. In order to protect the specificity of assets, enterprises tend to choose a highly controlled governance structure, and sole proprietorship is the best choice. This not only reduces the transaction cost of protecting your own unique technology, but also reduces the risk of being stolen or abused. Therefore, when the income obtained through joint venture is not enough to make up for the risk cost of supervision and control of patent abuse, enterprises are more inclined to choose a form with higher control.
(B) Cultural differences between China and the West
Sino-foreign joint ventures are contractual arrangements aimed at cooperation on the basis of mutual benefit and mutual trust. Due to the limited rationality and uncertainty of both parties, the contract reached by both parties is often uncertain. In the case of a specific asset investment relationship between the two parties, one party to the contract has loopholes or imperfections in the use of the contract, and seeks the quasi-rent due to the other party through the adverse selection of concealing information beforehand and the moral hazard of concealing behavior afterwards. Adverse selection beforehand and opportunistic behavior afterwards often become important factors of conflict between the two sides and internal instability of joint ventures.
One of the most prominent problems in the management of many multinational joint ventures is the conflict between the two sides in enterprise management and culture. The essence of management is a kind of culture, and the difference of cultural background determines the completely different management views of the East and the West. Business managers in different countries have great differences in working methods, cultures and ways of thinking. Western culture pursues Excellence and the realization of self-worth. People form a contract on the basis of equality, which is manifested in standardized management, system management and rule management, strictly following rules and pursuing system efficiency, thus achieving orderly and effective management. Oriental culture pays attention to "emotion and reason", and people form patriarchal ethics and hierarchical relations. In the management mode, the business philosophy suddenly merged, and it is difficult for Chinese and foreign businessmen to reach an agreement or even conflict in the transaction process. This growing cultural conflict will be manifested in the internal management and external operation of the company. In internal management, people's different values, different life goals and behavioral norms will inevitably lead to the increase of management costs, the difficulty of organization and coordination, and even the inefficient operation of organizations. In foreign operations, due to the existence of cultural conflicts, joint ventures cannot meet the market competition with a positive and efficient organizational image, often in a passive position in the competition, and even lose many excellent market opportunities. This invisibly increases the transaction cost of foreign investors. Therefore, when the external coordination cost of an enterprise is less than the internal management cost of the enterprise, the enterprise often chooses sole proprietorship.
(3) Host country system
The strategy of foreign investors choosing to enter the international market should be adapted to the system of the host country. Systems can be divided into formal systems, such as laws and regulations, government regulation, economic and social behavior management, and intellectual property protection. There are also informal systems, such as social customs, culture, behavior standards, and attitudes towards the operation of formal systems. The system standardizes the "rules of the game" and can reduce transaction costs. The influence of the system will make the investment more uncertain and increase the transaction cost.
At the beginning of foreign investment, due to the low degree of openness, many domestic industries are not allowed to be wholly foreign-owned, and joint venture is the best choice for foreign investment. Because the joint venture can take advantage of the advantages of "relationship" and "policy" of China natives or local enterprises, it can greatly reduce the external risks of enterprise operation and obtain higher external benefits of enterprises. However, with the continuous improvement of investment environment, more transparent policies, continuous improvement of laws and regulations and increasingly international integration of market rules, the external advantages of joint ventures have gradually weakened. Since 1992, China has promulgated a series of laws, regulations and measures to reduce restrictions on foreign investment. On the one hand, it regulates the behavior of foreign investors, protects their legitimate rights and interests, and at the same time relaxes some regulations on foreign investment equity. In 2002, China promulgated a new catalogue of foreign-invested industries, which further relaxed the restrictions on the proportion of shares of foreign-invested enterprises, abolished the different policies on taxation and exchange rate between wholly-owned enterprises and joint ventures, and further relaxed the restrictions on the business areas of wholly-owned enterprises. The loosening of foreign direct investment management policies caters to the requirements of multinational corporations' sole proprietorship in China. When China's external formal institutional environment tends to be perfect and foreign investors are more familiar with China's informal institutional environment, it shows that the external risks of operating a sole proprietorship enterprise tend to be consistent with those of operating a joint venture. For various interests, foreign investors will inevitably choose wholly-owned enterprises to strengthen their control and implement the globalization strategy conveniently and flexibly.
Four. conclusion
The new breakthrough of transaction cost theory opens up a brand-new perspective for analyzing the sole proprietorship tendency of foreign investment in China. No matter what form of wholly-owned enterprise, its purpose is to save transaction costs, improve the economic benefits of enterprises and obtain greater profits. It can be said that transaction cost is an important reason to explain the trend of sole proprietorship of multinational companies' investment in China. However, the impact of sole foreign investment on domestic enterprises is also obvious. This not only weakens the competitiveness of local enterprises, but also gradually forms a monopoly on the industry, crowding out the market share of domestic enterprises, especially national brands, and posing a great threat to China's comprehensive national strength and international competitiveness. Therefore, our government should formulate corresponding countermeasures as soon as possible, further improve the quality level of foreign capital utilization, and strive to avoid foreign investors taking advantage of the opportunity of sole proprietorship to monopolize our market and manipulate the economic system. At the same time, China enterprises should strengthen their independent innovation ability, rely on technological innovation to strengthen the construction of core competitiveness, strengthen brand protection, and weaken the monopoly brought by "sole proprietorship" as much as possible.