The Neo-institutional Analysis of the Transition of Modes of Business Operation of FDI in China

The goal of the article is to figure out the reason of "sole proprietorship" trend happened in the FDI mode of business operation,in order to provide theoretical advice to government.After the brief retrospect,author holds that this "sole proprietorship" trend, guided by the policies of Chinese government,was a gradually compulsory institutional transition from the top downward with micro-principal voluntary participating.Through the analysis of negotiation structure and transaction cost,author finds out that this phenomenon can be attributed to a neo-institutional reason that due to the different negotiation structures foreign-capital enterprises have low transaction cost in properties protection and agreement implementation.Therefore,author suggests the Chinese government enact laws and regulations in order to improve the FDI quality and decrease the negative effect of "sole proprietorship" trend.