This paper investigates the changing competitiveness of foreign-financed manufacturing firms and its implications for regional development in Guangdong province of southern China in the run-up to World Trade Organization (WTO) accession. It is argued that transnational corporations (TNCs) and some competitive, large-scale, locally-funded firms in Guangdong will triumph after WTO accession. The crowding-out process of small and medium sized enterprises (SMEs) in Guangdong will be accelerated in the near future, as they are competing directly with TNCs, and as their competitive advantages are diminishing, due to bureaucratic red tape and the rigorous enforcement of new government policies. Due to close business linkages with local privately-funded firms, the competitiveness and vitality of foreign-financed enterprises will have profound long term effects on the economic development of Guangdong, before and after WTO accession.
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