Manufacturing Foreign Capital Entry andChinese Indigenous Enterprises’Markups
Author:Yuduo Lu, Xiaofei Du Author Unit: School of Economics and Management, Dalian University of Technology, Dalian, P. R. China
Abstract：Using Chinese micro-enterprise data, we investigate the impact of foreign capital entry on indigenous enterprises’
markups. We find that foreign capital entry significantly increases enterprises’ markups. In addition, this paper
discusses foreign capital entry heterogeneity, and shows that foreign country capital and market seeking capital
have higher improvement on Chinese local enterprises’ markups than Hong Kong, Macao and Taiwan capital
and export oriented capital respectively. The conclusions remain robust after redefining foreign capital entry.
More importantly, we examine the moderation of Chinese indigenous enterprise heterogeneity. Results show that
indigenous enterprises’ learning capacity, ownership type and industry competition all positively moderate the
improvement of foreign capital entry on indigenous enterprises’ markups. Yet enterprises’ export density presents
negative moderation.
Keywords：Foreign capital entry; Indigenous enterprises; Markups; Heterogeneity
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