Abstract: Since December 2004, as corresponding restrictions on the entry of foreign capital into Chinese circulation industry have been diminished, the impacts of foreign capital on circulation industry are discussed widely. Taking the industry of wholesale and retail trade for example, the provincial panel data from 2006 to 2009 is utilized to construct analytic model in order to investigate the impacts of the entry of foreign capital on Chinese circulation companies. The results indicate that, there is no significantly negative impact of the entry of total foreign capital on Chinese circulation companies. However, if the degree of cultural similarity is comparatively high between the regions and countries from which the capitals come, it is likely to bring negative impacts for the entry of foreign capital on domestic circulation companies. In addition, if the domestic regions are of higher level of openness, the circulation companies are likely to be affected negatively. Finally, further thoughts about how to analyze the impact of foreign capital on consumer welfare and the security of circulation industry have been proposed.
Keywords: Circulation Companies, Open Economy, Entry of Foreign Capital, Panel Data Model
source:Finance & Trade Economics ,No.3,2013