I. To analyze and understand:
1. The situation after the China government has taken measures to become globalized and joined WTO
2. The required changes of direction for their open-door policy
3. Measures for improvement for the management system of foreign investment and the goals for strategy.
II. From the official data of the China government, the motivation of the foreign investment of China enterprises, the strategies applied, the method for the choosing of the location are revealed.
The time of the research is set from the data within 2000 to 2005. The research subject has been focused on the China enterprises, or the department of foreign investment of them.
The mode of the enterprises’ foreign investment mode is concentrated on direct foreign investment.
The region of the research includes the outland area besides China, i.e. Hong Kong, Macau or even other foreign countries. The bibliography covers from Chinese journals, regulations, books, and dissertations. The methodology conducted for this research is second-hand data study and case study. The motivation of the study can be achieved through the method described as above.
1. Confronting economic Globalization and regional economic integration, the China enterprises have to deal with many challenges, such as the Internalization of domestic market, and the domestication of international market. In order to solve the dilemma, the China government evolves two policies, “Walking Out” and “Inviting In” as the balanced two new principles on the foreign direct investment matters.
2. The China government supports those enterprises which are more competent, which invest in the natural resources that China is not abundant in, and which can attract foreign skills and techniques.
3. Ministry of Commerce has released most of the authority of the approval of the enterprises for foreign investment to its provincial subordinate units. Nevertheless, there are five categories needed to be approved by the Ministry of Commerce. The Five categories are as follows: 1. investment of the state-owned enterprises 2. investment of natural resources development, with the investment value up to two hundred million US dollars 3. investment in foreign exchange up to value fifty million US dollars 4. investment in Taiwan 5. investment with the countries which are not diplomatically tied with China. What should be notified is that the investments in U.S.A. and in Japan still require the approval of the Ministry of Commerce.
4. Most of the China foreign investment is motivated by the need of expansion of the enterprises. The main location is Hong Kong. The prominent industry is the third industry, i.e., the service industry. The subjects of the investment are state-owned enterprises and the limited corporations. The subjects of inbound investment are from littoral cities and areas: Guangzhou province, Zhejiang province, Shandong province, and Shanghai city. The finance for foreign investment comes from the reinvestment of the interest and investment of capital stock.
5. The advantage of China foreign investment is based on the support of the policies of China government; the disadvantages are the insufficiency of the employees with abundant international trade knowledge, insufficiency of capital, not being accommodated to foreign investment environment due to traditional system of the enterprise. According to a survey, one-third of the China enterprises are in debt, another one-third can just make both ends meet, and the other one-third are making profits.