8.1 Tony Li
We all know that the foreign investment is a necessary part of global expansion. Many developed countries prefer to invest developing countries. For instance, the US has invested much more fund in China. Since the initiation of its market reforms in the 1980’s. China has been a preeminent recipient of foreign direct investment (FDI). Until 2011, there is over $1.2 trillion have been invest in China as foreign direct investment, it made Chinese industries has been transformation, and contributed enormously to the nation’s industrial output. In addition, the more foreign manufactures, the more Chinese subsidiaries have dominated (Wei, Xiao & Yuan, 2014).
When a multinational company announces as new project in a poor county, it is usually a Sause for celebration. Especially when this project would not hurt the environment
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However, FDI will limit their local companies, and they would not have their own companies. Also, it will bring extra competition. Otherwise, competition may not a good thing for economy. It may destroy their local companies. So in some countries, they cannot allow foreign direct investment (Jain, 2015).
In Shanghai, there are many foreign investments have left. Because of change, those investors have frustrated about the economy in Shanghai as well as the worse and worse environment. They could not bear the bad weather even in Hong Kong (International Business Times, 2015). We should that China have a great change in economy and abstract lots of foreign company to invest in China. However, the increasing rent, labor, pollution. That make too many companies consider that China is still a better place to invest. And now, India and Vietnam may be a next choice for them to invest.
Reference:
Citizen.org. (2016). Trans-Atlantic Free Trade Agreement (TAFTA). Retrieved October 21, 2016, from:
I found this article "Foreign direct investment: Companies rush in with the cash" on the financial times website (www.FT.com) published December 11, 2002 written by John Thornhill. The reason for choosing this article is my personal interest in the Chinese economy and its attractiveness to the foreign investors. Apart from the foreign direct investment this topic has also helped me in understanding the impact of Chinese economy on the global market.
... China’s goal is to once again be the ‘middle kingdom’, and they will not hesitate to take extreme measures to regain this glory. They are willing to take a ‘hit’ in the short-run to achieve their long-term goals. The influx of new technology, information, capital, management, and industry will boost China into the 21st century and beyond.
FDI tends to focus on opportunities in the same continental region. This often reflects attempts by multinationals to build up regional networks starting near their home base. A major conceptual problem with Porter's model is due to the narrow definition he applies to FDI. Porter defines only outward FDI as being "valuable in creating competitive advantage" and that inward FDI is "not entirely healthy" . He also states that foreign subsidiaries are importers, and that this is a source of comparative disadvantage .
Foreign Location Choices or Foreign Direct Investment (FDI) Foreign direct investment, or FDI, will play an integral part in any company looking to enter the global market. Political Risks When entering a new country’s market, political risks must also be taken into consideration. Determining whether the country favors collectivism vs. individualism and democratic vs. totalitarian. Collectivism, where the country focuses on what is best for the collective good, might be too different from Roraima’s current home country.
The FDI level has been so low in previous years because of the regulation they have had to shy away foreign investments. In the retail sector for example, they established the Large Scale Retail Store Law, making large volume stores unable to do business in the country. They even resisted acquisition from foreign investors because of the fear is that new workers would restructure too harshly, cutting jobs and breaking long-standing commitment with suppliers.
It will be advantageous for the company if they can project themselves as responsible corporate citizen and an environment friendly company. Social enrichment schemes, recycling schemes and educational funds can be initiated to cater to this cause and long term goal.
According to Teagarden & Cai (2009) Chinese companies have expanded abroad for three reasons. Firstly, ‘to secure natural resources to satisfy the demand of their home costumers for raw and fuel; secondly to identify and secure foreign technology and know-how; finally, to escape home market saturation and ruthless price wars’ (Teagarden & Cai, 2009: 73). In addition, Teagarden & Cai (2009) noted that in order to become multinational firms, Chinese companies followed a pattern of four phases:
In the year 2007, China and India ranked first and second respectively in the list of ideal foreign direct investment (FDI) destinations, according to A T Kearney, a global strategic management consulting firm (The Press Trust of India Limited, 2007a). The two nations, because of their similarities in geopolitical, economic and demographic aspects, are often compared with each other. To determine which one is more attractive for businesses to expand to, this essay will examine the business environment of both countries from the following perspectives: political/legal, economic, socio-cultural and technological.
International investing is something that many investors find that they can benefit from for many reasons. Two of the main reasons why investors choose to invest in foreign markets are growth and diversification. Growth allows investors the potential to take advantage of new opportunities in foreign emerging markets. International markets can potentially offer opportunities that might not be available in the United States. Diversification allows investors to spread out their risk to different markets and foreign companies other than those just in the United States allowing them to potentially create larger returns on their investment as well as reducing risks. (U.S. Securities and Exchange Commission, 2012) While investing internationally can be a very lucrative and rewarding decision, there are also extra risks involved with investing internationally. One of the main risks that international investors encounter is foreign exchange risk also known as currency risk. Currency risk is a financial risk that is created by contact with unforeseen changes in the exchange rate between two currencies. These changes can cause unpredictable gains or losses when profits from investments are converted from a foreign currency to the United Stated dollar. There are precautions that can be taken by investors to potentially lower their risk of currency value fluctuations and other risk factors that are present in international investing. (Gibley, 2012)
Control: the host countries are threatened by the investment of large multinationals. In fact, big companies impose their rules due to the size of their business activities. Actually, big multinational controls the price and quality of production abroad. As a matter of fact, the issues have a negative impact on the local market and workers. Some governments implement special policies to limit the ownership of foreign investors in their markets.
China has also expanded their trading industries with countries such as South Korea, Japan, Taiwan, ASEAN, India, Russia and Hong Kong. This has not satisfied the Chinese greed for income as they also export and import goods to American countries, name...
China's development is praised by the whole world. Its developments are not only in the economic aspect, but as well in its foreign affairs. Compared with other developed countries, China is a relatively young country. It began constructing itself in 1949. After 30 years of growth, company ownership had experienced unprecedented changes. Entirely, non-state-owned companies can now be more involved in sectors that used to be monopolized by state-owned companies.
The presence of multinational companies in other countries often does not benefit the economies of these countries; poverty continues to increase despite the new jobs do not pay as well. Moreover, multinational companies are not subject to the same environmental and labor laws that are in the country.
Some researchers focused upon the impact of FDI on the different sectors of the economy like agriculture sector, industrial sector, telecommunication, etc., some researchers paid attention to develop different mathematical and statistical model to analyze the role of FDI in economic development. In this study we have collected the data set from the databank of World Bank and have been matched up against the data available on the site of UNCTAD (United Nations- -Conference on Trade and Development). Above two data sources have been chosen because they are the most reliable sources of data and are used by almost every researcher. The data set consists of FDI inflow (US$ mn) and Percentage growth of GDP (in Service Sector) through FDI. The data set is annual and covers the time period of
The environment is a shared responsibility among members of society: business entities, people and government. In recent years, it is becoming common to associate entities with apprehensions regarding water, air and soil pollution, hence, business entities play a vital role in the conservation of natural resources. As suggested by Eze et al., multinational companies can massively contribute in the promotion of the environment through innovations and improvements not only on the entity’s products but also in its methods. Stakeholders are influenced greatly by the environmental and social standing of an entity. So, they require that business entities provide products that are cheap and of good quality without leaving any harmful traces to the