Nobody downloaded yet

China as an attractive market for Foreign Direct Investment - Essay Example

Comments (0) Cite this document
Summary
The idea of this research emerged from the author’s interest in why China becomes an attractive target for FDI. This paper illustrates various reasons for this such as quality of the government; cheap labor force; large domestic market; investment flows from international Chinese…
Download full paperFile format: .doc, available for editing
GRAB THE BEST PAPER94.7% of users find it useful
China as an attractive market for Foreign Direct Investment
Read TextPreview

Extract of sample "China as an attractive market for Foreign Direct Investment"

Download file to see previous pages This research will begin with the statement that China is the fastest growing economy in the world and since 1980s has been consistently experiencing high economic growth rates. With the sheer size of the economy and the expansion of manufacturing base of the country has made it one of the largest and most lucrative markets to enter by the international firms. Initially China offered great advantage in terms of access to low cost labor as well as raw materials and manufacturing facilities. However, due to its domestic economy size and the rising income levels, China also presents itself as one of the largest market for the international firms to enter into. All major international brands including McDonalds, Apple, Next and all other better consumer brands have made their entry into China to tap into the local market. Foreign direct investment in China and the impact it had on the Chinese economy is considered as one of the most important economic success stories of the recent times. By the end of 1999, China was having $300 billion of foreign direct investment in the country which was merely $19 billion a decade ago. This figure has now increased manifolds and China is one of the largest attractors of foreign direct investment in the world. What is also important to note that most of the FDI in China was through the Greenfield projects with the collaboration of the local players in the market?  Why this has happened and why China becomes an attractive target for FDI will be discussed in this question. Chinese Economy Chinese economy is the second largest economy in the world overcoming Japan as the second largest economy in the world after USA. It is also the fastest growing economy in the world with growth rates of approximately 10% for last three decades. Such consistent economic performance indicates that the Chinese economy has been able to project itself as one of the most important target for foreign direct investment. During 1950s and 1960s the overall focus of the government was on controlling inflation through tighter budgetary and monetary policy controls. Though China is still a communist country with government controlling most of the resources of the country but it still managed to make a transition to market based economic practices. Though It has the history of nationalizing the banks and other institutions however, it has been continue to attract foreign direct investment in the country. There can be different reasons as to why China became the attractive economy for the foreign direct investment. More important reasons are discussed below: Quality of the Government Though China is the leading centrally controlled economy after USSR with government controlling most of the resources however, it is still considered as the mmarket-friendlygovernment. It has been argue that despite constraints, China has been able to put in place an effective FDI governance mechanism in the country. The quality of the government, overall policies and the environment presented in China serves as one of the biggest motivating factors for international investors to invest in China. It is also important to understand that greater control of the Chinese government on the management of overall affairs of the economy may be supportive too. Since the government is politically strong therefore foreign direct investment may have become easier. ...Download file to see next pagesRead More
Cite this document
  • APA
  • MLA
  • CHICAGO
(“China as an attractive market for Foreign Direct Investment Essay”, n.d.)
Retrieved from https://studentshare.org/business/1403339-chinese-economics
(China As an Attractive Market for Foreign Direct Investment Essay)
https://studentshare.org/business/1403339-chinese-economics.
“China As an Attractive Market for Foreign Direct Investment Essay”, n.d. https://studentshare.org/business/1403339-chinese-economics.
  • Cited: 0 times
Comments (0)
Click to create a comment or rate a document

CHECK THESE SAMPLES OF China as an attractive market for Foreign Direct Investment

Direct Foreign Investment

...Direct Foreign Investment I. INTRODUCTION The study of foreign direct investment between China and Brazil is of great importance because it aids in the understanding of the dynamics involved in the country’s foreign investments. Research studies indicate that there is direct relationship between FDI and financial markets. According to the research studies, structural changes in financial markets have been used in attracting FDI. The general view is that stock markets have been established with the main...
8 Pages(2000 words)Coursework

Foreign direct investment

...advantages, rich natural resources, market etc of another economy. In short this form of investment involves investing within the firm but outside the region. Importance of FDI This form of investment provides the necessary capital required by some developing economies which might be difficult to generate through domestic means. Besides the financial resources the foreign direct investment also provides the opportunity to make use of sophisticated and latest technology. It has been seen that the companies with no prior experience face problems in the import of such technology as this is deemed to be risky as well as...
6 Pages(1500 words)Assignment

Foreign Direct Investment (FDI)

...is a reaction to the increased liberalization of business activities, changes and advancements in information and communication technology and capital market changes. Jermakowicz and Bellas (1997, p. 33) explain that through the liberalization of national and regional business regulatory frameworks and governance, foreign direct investment has been achieved. Globalization has enabled foreign direct investment to be achieved by international companies and corporations. It is however argued that information and communication technology has played the most significant role in the achievement of foreign...
10 Pages(2500 words)Essay

China Investments. What makes china an attractive location for inward direct investment by multinational enterprises

...that cater for the needs of internal interest groups, in which its regional trade agreements allow China to act as a form of investment protection. The free trade agreements are meant to liberalise the market so that investors can make the most of the available resources and provide a market for its goods, where the local market is flooded with competitive goods from other local investors (Zeng 2010, p. 636). This drives the country to be more attractive for foreign direct investment owing to its ability to stand for liberalisation and protection of its industries and investors, as well...
5 Pages(1250 words)Essay

Foreign Direct Investment

... aspect of IFIs in the past decades was the growth of globalization and the increasingly integrated role of the capital markets. In the early 1980s, a bulge in the level of capital flows in the direction of emergent markets became more prominent, on the basis of managing the oil revenues. Yet this degenerated into the 1982 economic meltdown due to accumulated debts. After a lull of economic crisis and the development of stronger macroeconomic policies which yielded stability, the world economy registered a sharp rise in the capital flows in the early 1990s. This came at a time when many countries that sought to rely upon direct foreign investments and credit services from non-banking organizations, accounted for the primary source... in the...
17 Pages(4250 words)Essay

Japan Foreign Direct Investment

...enterprises, liberalization of their foreign exchange markets and establishment of fiscal incentives like tax holidays in order to attract more foreign direct investments. The quest for increased foreign direct investment stems from the assumption that foreign direct investment leads to economic benefits within the host country, which assumptions are based on economic theory. In addition, there is existing empirical research that has further highlighted the benefits of foreign direct...
7 Pages(1750 words)Research Paper

China and Foreign Direct Investment

..., for these obvious reasons china has become the main attraction for foreign direct investment. By the year 2002, china was the leading recipient of foreign direct investment in the world, attracting inflows from Japan and the US estimated at about $52 billion. The reason why the Chinese are attracting more foreign direct investors is that in spite of its fast growth of China, the country still suffers income inequality across the region. Such inequalities are very risky to the country and could result in...
10 Pages(2500 words)Essay

Foreign Direct Investment in India and China

...1 Introduction Foreign direct investment (FDI) is the most talked about these days in the international economic parlance and for a long time, a rat race has been continuously going on among the world nations, especially the developing countries, to attract as much FDI as possible. China and India are the two growing economies in Asia that have been frequently making news with regard to the FDI. Though these two are the two most populous countries being guided by the commonality of abundance of human resources, the disparity between these two countries in the inflow of FDI is as huge as the Himalayas. Statistics reveal that in 2001 alone,...
14 Pages(3500 words)Essay

Foreign Direct Investment

.... A multinational firm in a developed country may face higher labor costs, scare production resources and higher production costs when locating its subsidiaries in its own home country, while a shift overseas may involve a larger initial investment but is economically beneficial in the long run because the margin of profits are higher, with the development of new markets. 1.1: Introduction: Foreign Direct Investment refers to the investments that a multinational firm makes when it is initially located in one country but decides to locate to or acquire substantial production facilities in another country. FDI is a significant factor...
9 Pages(2250 words)Essay

Foreign direct investment

...). “Foreign Direct Investment in Developing Countries: What Economists (Don’t) know and what policy makers should (not) do!” CUTS. Available at: http://www.cuts-international.org/FDI%20in%20Developing%20Countries-NP.pdf (Accessed on Nov. 10, 2009). 10. Ray, D. (2007). “Development Economics”. New Palgrave Dictionary of Economics. Available at: http://www.nyu.edu/econ/user/debraj/Papers/RayPalgrave.pdf (Accessed on Nov. 10, 2009). 11. Yang, D. (2005). Chinas offshore investments: a network approach. Edward Elgar Publishing (Gloucestershire). 12. Moran, H, T, Graham, M, E and M, Blomstrom (2005), “Does Foreign Direct...
24 Pages(6000 words)Research Paper
sponsored ads
We use cookies to create the best experience for you. Keep on browsing if you are OK with that, or find out how to manage cookies.

Let us find you another Essay on topic China as an attractive market for Foreign Direct Investment for FREE!

Contact Us