| Summary: | 碩士 === 國立政治大學 === 財務管理學系 === 107 === The economy of China has been soaring in the past two decades. The large population and the cheap labor made China the most popular country for manufacturing products. Due to the fact that China has bigger influence on global export, manufacturing industries with higher labor costs in developed countries were seriously affected. Hombert and Matray（2015）studied the data of manufacturing firms in U.S. between 1991 and 2007, and found that the sales growth and the profitability of the companies in U.S. decreased if they were facing higher import penetration from China, but Research and Development (R&D) spending could mitigate this negative effect.
We examine whether the effects are the same in other industrialized countries because of diverse industrial structures. In our empirical results, we find that the effects of import penetration on profitability of firms in Germany and Denmark decreased due to import competition from China. In contrast, the profitability of firms in Switzerland and Japan rose as import penetration became more severe. In Australia, Spain, Finland and New Zealand, we find no significant evidence for the effects of import penetration on companies’ profitability. Furthermore, the results from Australia and Germany showed that investing in R&D could benefit companies. On the contrary, companies investing more on R&D had lower profitability in Japan. Our results show that higher import penetration from China affected our sample countries with diverse industrial structures differently.
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