Analysis of Behavior Choice between Export and Ofdi Based on China Enterprises
|School||Nanjing University of Finance and Economics|
|Keywords||Productivity Fixed-Effect Model Export FDI|
In China, with three decades of reform and opening up, international trade has become an important cause of our increasing GDP. Since the continuous appreciation of RMB in recent years and the negative role our enterprises in the global production chain, Chinese enterprises have to go abroad. But here are the questions, Are Chinese companies able to complete the transformation? Is every company suitable for going abroad? In this paper, we analyze the path of Chinese companies’international strategy choice, by the trade and investment theory, and the data from various industries in China. The choice among domestic sales, export and investment is analyzed by a productivity standard. The reason why some enterprises choose export and investment is also explained in this article.We combine the New-New trade theory and the theory of trade and investment. We analyze choice behavior between export and foreign direct investment by productivity from the dynamic and micro point of view. The model of New-New trade theory was analyzed by adding some suitable factors for the China. We find out productivity is the key of companies to choice among domestic sale, export, and foreign direct investment. Business trade patterns can be chosen by divided intervals of the productivity of enterprises.By the panel data of 36 industries in recent 10 years, 36 industries’suitable pattern is figured out in empirical part. We use the perpetual inventory method to calculate the productivity of the 36 sectors, and divide the productivities into four intervals. A fixed effect model is established to analyze the relationship between productivity and export. By analysis of panel data regression with Stata(10.0) software, we find out that the relationship between export and productivity is positive. So, the model of export and trade theory is also suitable for Chinese companies.Finally, some suggestions are given according to the above analysis. Chinese enterprises need to go abroad, but not all businesses are suitable for going abroad strategy. Enterprises should measure their productivity before. If the productivity of enterprise is in the forefront of the industry, in [2, 6] interval, it is positive for the enterprises implement going abroad strategy. If the productivity of company is in the middle of its industry, in [1, 2] interval, then it is beneficial for export. If the productivity of enterprise is low in the industry, in [0, 1] interval, the company is only for domestic production, or may face the risk of quitting the market.