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In the research of Helpman et al (2004), they have contended that FDI is horizontal because they assumed that multinational corporations generally implement the investment in the host market the same as they do in their own. This indicates the trade-off of proximity-concentration. FDI is different from export because it can avoid spending different kinds of transaction costs. However, companies can make additional fixed costs. If what they get form additional fixed costs is lower than the different kinds of transportation costs, multinational companies will choose to make investment in a foreign nation. With the help of their effective models, they can perform some predictions about the development of the proximity-concentration trade-off. While making these predictions, they hold that every company is different in its production capacity. After conducting the market research for the market productivity and other factors, companies will work out the strategy which will is suitable to their conditions and can effectively get them to make profits. Then companies can be classified into three categories. The first is the kind of company with low productivity. These companies can only survive in the domestic market and thus don’t expect to gain profits from FDI or exports. The second one is the company with a medium-sized productivity at the medium export level. The last is the company with high productivity which get them involved in FDI.

2.2 The influence on banking industry

FDI spillovers in the manufacturing industry have also been touched upon in literatures in recent years. Then the influence of FDI on the banking industry will be analyzed in this part. As we all know, Non-financial has a close connection to financial companies. Companies can be involved in FDI directly, but they should have the knowledge of different characteristics of the banking industry and different cross country trade contexts. There exist four main aspects of differences in the banking industry. Firstly, instead of trading tangible products, banks offer financial products and services to the host country. Besides, banks offer financial services not for free but pay and receive interest. Secondly, the banks’ FDI is defined as horizontal for the fact they do not need other overseas banks to provide them any platforms. Thirdly, as banks offer financial services, they will spend few transportation charges than other industries. Finally, in order to enter new markets, it is very important to have the well-equipped machinery for banks as other industries but the machinery costs less than that does in the other industries. Despite the lower costs in the machinery, banks have to spend a lot of time, money and efforts to build up the customer network and reputation which are the most important assets for banks.

Different from the manufacturing industry which is evaluated through the assessment of its productivity, banks adopt net interest margins and overhead costs to ensure the enhanced efficiency (Goldberg, 2004). The two following reasons can be listed here for using these approaches to efficiency improvement. Firstly, in the banking industry, it has brought about a lot of discussions a本论文由英语论文网提供整理，提供论文代写，英语论文代写，代写论文，代写英语论文，代写留学生论文，代写英文论文，留学生论文代写相关核心关键词搜索。