Foreign direct investment (FDI) has grown dramatically
as a major form of international capital transfer over the past decade (Froot, 1993).
According to World Investment Report (2008) shows
In recently, there is an example can be found Apple is the world's more valuable company is pitted against an almost unknown firm. According to BBC news (2012) reported the Apple's stock market value closed above $500bn (£314bn), cementing its position as the world's most valuable company. Apple has such achievements, which is totally inseparable from its successful strategic management. And there are any relationships between in Apple direct investment in China?
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Apple direct investment in China immediate goal is to have
a lot of the consumer market in China, and China has strong human resources and
technology, these will bring huge benefits. As result, Moyer (2012) pointed out
the Apple analysts had estimated that in the U.S, Apple would take the company
as long as nine months to find the 8,700 industrial engineers it would need to
oversee workers assembling the iPhone. In China it wound up taking 15 days. However,
obviously it can be seen FDI bring many benefits for multinational itself, and it
can maintain a competitive advantage. The contrary, there are any benefit for
host country?
In addition, FDI is play vital role in the Chinese economy
growth. There are Including multinational companies will bring important source
of funds, and the higher the proportion of exports of foreign-invested
enterprises, which will increase exports and improve the export structure. In
addition, the increase in output and employment, can be drawn, FDI on the positive
role of China's economic development is also reflected in the promotion of institutional
change and develop talent.
“In
2006, developing countries attracted $380 billion in FDI - more than ever
before. While two thirds of these flows went to rapidly growing markets in
Asia, virtually all developing regions participated in the increase.”
In addition, there have been concerns that a slowdown
in the US coupled with the ongoing debt crisis in Europe may hurt global growth
and dent consumer demand (BBC news, 2011). In the same time, as World
Investment Report (2008) claimed in 2007, the exchange rates of the major currencies
of developed countries continued their trend that started at the beginning of
this decade. Moreover, at the macroeconomic level, the economies of developed
countries could be affected by the slowdown of the United States economy and
its subsequent impact on the most important financial centres, affecting bank
liquidity and credit supply (World Investment Report, 2008).
The foreign enterprises to select the location of manufacturing
subsidiaries, in generally, that consider the size of the market as a very
important factor. The reason is close to the consumer and factor markets, thereby
reducing transportation costs, to keep abreast of changes in market demand and
obtain agglomeration economies of scale.
In recently, there is an example can be found Apple is the world's more valuable company is pitted against an almost unknown firm. According to BBC news (2012) reported the Apple's stock market value closed above $500bn (£314bn), cementing its position as the world's most valuable company. Apple has such achievements, which is totally inseparable from its successful strategic management. And there are any relationships between in Apple direct investment in China?
O41%7B3%25X6SPVS~BM(%60BQKO.jpg)
Apple direct investment in China immediate goal is to have
a lot of the consumer market in China, and China has strong human resources and
technology, these will bring huge benefits. As result, Moyer (2012) pointed out
the Apple analysts had estimated that in the U.S, Apple would take the company
as long as nine months to find the 8,700 industrial engineers it would need to
oversee workers assembling the iPhone. In China it wound up taking 15 days. However,
obviously it can be seen FDI bring many benefits for multinational itself, and it
can maintain a competitive advantage. The contrary, there are any benefit for
host country?
In addition, FDI is play vital role in the Chinese economy
growth. There are Including multinational companies will bring important source
of funds, and the higher the proportion of exports of foreign-invested
enterprises, which will increase exports and improve the export structure. In
addition, the increase in output and employment, can be drawn, FDI on the positive
role of China's economic development is also reflected in the promotion of institutional
change and develop talent.
At the same time, FDI has continued a massive increase,
in the backdrop of economic globalization and liberalization of international
investment trends. In general, a state is more favorable than in other areas of
foreign investment policy is an important factor affecting the investment
environment, attract FDI plays an important role. Does China to continue to loosen
control policy to attract more investors?
While Chinese economy has grown dramatically over the
past three decades, its financial markets have remained mostly closed off from
the rest of the world. Rabinovitch (2012) shows China should accelerate the
loosening of capital controls, its central bank said, and outlining the path to
a freely tradable currency and more open capital markets. Rabinovitch and Cookson
(2012) also explained China outlines plan to loosen capital controls, that foreign
investors will be much bigger players in Chinese stock and bond markets. Furthermore,
Chinese central bank is the most detailed public proposal yet for loosening the
government’s strict capital controls. If implemented as envisaged, the global
economic landscape will undergo sweeping changes this decade (Rabinovitch and Cookson,
2012). Despite FDI has a positive role in the host country's economy, but it also
has the negative impact cannot be ignored?
Supplementary video: China's
paradox of prosperity. Available at: http://video.ft.com/v/1467534811001 (Assessed
2 March 2012)
Although your points are great about the advantages FDI has for the country (China). Are there any risks that FDI brings with it? and if there are, aren't some governments and countries right to restrict FDI? or are you in total favour of FDI?
ReplyDeleteThe trend of economic globalization and liberalization of international investment, foreign direct investment continued a massive increase, but mainly concentrated in developing countries (e.g. China). FDI has both the positive role of the dominant aspects, but there are the negative impact cannot be ignored.
DeleteNegative impact is mainly reflected that, firstly, FDI clearly reduces the capability of independent innovation of domestic-funded enterprises. For example, FDI has a positive effect on some domestic enterprises to enhance the capability of independent innovation, to achieve through increased competition. But on the other hand, if the large scale absorption and utilization of FDI, which will be significantly, weaken the ability of independent innovation with many domestic-funded enterprises.
In addition, FDI in a long time large-scale entry is bound to exacerbate the fierce competition of foreign economic and domestic national economy. FDI by virtue of its dominance of the capital, technology, management, brand, size, control of certain domestic industries and markets, and bring drawbacks of the original domestic-funded enterprises, a significant negative impact on the economic development of the country national.
At the same time, foreign direct investment enterprises in China, part of a high material consumption and high energy consumption and polluting enterprises. Although China's economic development has a positive effect, but the negative impact of resource consumption and environmental damage should not be underestimated. Exacerbate the shortage of resources, deterioration of ecological environment.
Above, constitute a greater threat of FDI on economic security and basic economic system, so each country has also implemented different policies to effectively control.