Abstract:This paper uses the Chinese industrial firm micro data to analyze the effect of multinational enterprises’ entry on the firm’s value-added rate (VAR) in China. The micro econometric result reveals that multinational enterprises’ entry improves the Chinese firm’s VAR significantly, and that the higher the entry density of multinational enterprises is, the higher Chinese firms’ VAR is, especially the effect of the corporations from foreign countries is higher in contrast to the corporations from Hong Kong, Macao and Taiwan (HMT). Multinational enterprises’ entry exerts a greater positive effect on the VAR of firms with the features of exporting and high regional marketization degree. The density of enterprises from foreign countries goes up, the VAR of all features of firms improves significantly. However, the effects of the density of multinational corporations from HMT are asymmetric for the VAR of the firms with different features. From value-added rate perspective, Chinese export enterprises do not have the phenomenon of “productivity paradox”, therefore, China should further deepen reform and open-up, sufficiently use and give full play of the active role of multinational enterprises in the transformation and upgrading of Chinese industries.