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Why TNCs try to make their subsidiaries sole proprietorship enterprises in China?

—An analysis of TNCs’ strategy on equity ownership structure


A review on the evolution of the Transnational Corporations’ (TNCs) equity ownership structure in their subsidiaries in recent 20 years reveals an increasingly clear preference for sole proprietorship. Based on results of the prior researches, this paper presented a two-stage evolutionary model to explain the underlying reasons of the tendency in China. It is shown that the TNCs’ strategic choice for their subsidiaries’ equity ownership structure is a decision-making process and result, which makes the parent company, as the principal part, based on the current business strategies of the parent company (local or global integration) at the premise of the investment environment of host country, pursue possibly unproductive receipts by choosing or changing the structure of the equity ownership.


考察20多年来跨国公司在华企业的股权结构变动趋势,可发现其独资倾向日益明显。 借鉴国内外学者关于跨国公司股权结构战略的研究成果,在东道国为新兴市场经济国家前提下, 可提出一个跨国公司股权结构战略两阶段演进模型, 从而揭示跨国公司在华独资倾向增强的深层原因, 即追求股权结构战略改进的预期收益。


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Correspondence to Li Wei’an.

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Translated from Guangli Shijie 管理世界 (Business World), 2003, (1): 57–62

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Li, W., Li, B. Why TNCs try to make their subsidiaries sole proprietorship enterprises in China?. Front. Bus. Res. China 1, 365–377 (2007).

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