With the development of global economy, the multinationals search for relevant resources worldwide and optimize its supply chain. Domestic companies, due to increase in labor cost and fierce competition, are forced to invest overseas and establish the factories, and shape its own supply chain network system through integrating domestic and oversea market. In this way, domestic companies ease competition press and sharp the advantages through allocating resources worldwide. Beyond profit from market demand, another unique profit channel for multinational is from interest delivery via transfer price. Up to now, while existing literatures focus on transfer pricing policy and its effect under a single supply chain scenario, there is still a lack of understanding of how hidden interest delivery is conducted under supply chain networks including local chain and oversea chain. In this paper, based on the literature from fields of global supply chain and transfer price, a framework of across-chain cooperation in domestic and overseas markets is developed, and the precondition of hidden interest deliver by multinational supply chain is explored. Then, through introducing Transfer Pricing (TP), decision-making models of delivering hidden interest without and with horizontal cooperation for multinational supply chain are established. Then the single TP and duel TP modes are designed. What's more, the relevant tactics and conditions of different TP modes are studied. Finally, the models is optimized, and the sensitive analysis under different TP modes is conducted. It is found that corporate income tax is playing an important role in hidden interest deliver via transfer pricing. Meanwhile, in the setting of single TP, due to simple trigger mechanism, multinational supply chain hidden interest delivery is more prone to be supervised and identified, it is normal to apply it into practice combined with variety of cost. In the setting of duel TP, it is more elusive for two transfer prices changed with diverse direction to delivery interest than with the same directions. In addition, profit rate from hidden interest delivery is higher than that from increasing demand in the context of horizontal cooperation.
LI Ji-zi, WANG Zhong-rui, LIU Chun-ling
. Decision-making of Hidden Interest Delivery for Multinational Supply Chain with Transfer Pricing[J]. Chinese Journal of Management Science, 2017
, 25(12)
: 48
-58
.
DOI: 10.16381/j.cnki.issn1003-207x.2017.12.006
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