Abstract: China has been entered World Trade Organization,and will be held to the whole international market step by step.At the time of choosing the way of direct investment,more and more enterprises show very great interests in solely foreign funded business.The article analyzes the cost of losing efficiency in joint venture,and then finds joint venture is not always fit for international market,and sometimes unsteady.So joint venture must be transformed into single proprietorship. Along with the conditions maturing,solely foreign funded business will play the main role in the international market.

Key words: direct investment, transaction cost, information, asymmetry, law force