Premium Essay

China Foreign Investment

In: Business and Management

Submitted By mba2017
Words 1720
Pages 7
1. In business we have to take many financial decisions which can put a deep impact on the survival and growth of the business. A wrong decision may be proved deteriorate for the business. From many financial decision that we have to make, the most important is of capital budgeting. Capital budgeting refers to the planning of long term capital expenditure and requires due consideration. The sum involve in this type of decision is very large and this type of decisions normally cannot be reversed. So it is imperative to properly analysis each factor which may affect capital investment and the risk associated with the factor must be adjusted when determining the feasibility of the project.
Identification of all the risk factors involved in the project is essential to determine the return required from the project. This process of identification of every risk factor that may arise becomes more complicated in case of an international project because the risk factors differ from country to country and there are some risk factors which are unique to a country. Required rate of return on an investment project is the rate of return which investors who have contributed their money for the project expects to earn from the project. There is a direct relationship between the risk involved in a project and return required on the capital invested in the project. Higher the risk higher will be the expectation of the investors of return from the project for bearing additional risk.
Capital that is invested in capital investments can be arranged through different sources. Capital can be arranged through equity capital, debt capital or retained earnings. Equity capital is the capital that is arranged by issue of new shares for the investment. Investors when invest money in the stock of company they expect return on their money. This expectation of stockholders to get return on…...

Similar Documents

Premium Essay

Foreign Investment in India

... Summary The article “Indian firms' foreign ownership at its peak” talks about foreign ownership in listed Indian firms. According to the analysts the foreign ownership has reached its peak and is expected to rise further as corporate profitability grows. However, factors such as high inflation and corruption may result in overseas investors being careful with their actions. As a result of year 2010, foreign institutional investors (FIIs) shareholding rose to the highest level since Indian markets opened up to foreign investment in 1993. In addition, strong corporate earnings had made India the top investment destination in 2010. As India is the second fastest growing major economy in the world after China, it is likely to attract higher investments in the future. Although the growth potential outlook for India remains positive, it is susceptible to correction due to is top priced trading compared to other markets. The threat of high inflation and rising crude prices resulting in a slow-down of growth and corporate profitability has affected the foreign investors action. The moderation in foreign flows has led to a decline in stock prices. An increase in FII shareholding was detected in sectors, such as consumer goods, pharma, metals, large software firms and telecom service providers. In banking and financial industry, however, the FIIs stakes were lowered as well as in most construction firms. The trend in foreign inflows in the future will depend largely......

Words: 300 - Pages: 2

Premium Essay

Foreign Direct Investment

...2.1.1 Foreign direct investment 2 2.1.2 Economic development 3 2.2 Related literature: The role of FDI in economic development 3 2.2.1 The radical view of FDI 3 2.2.2 The positive view of FDI impact 4 2.3 The impact of economic development 5 3. Case of study: the impact of FDI in garment industry and automobile industry in Viet Nam 7 3.1 Overview of FDI in Vietnam 7 3.2 Garment industry 8 3.3 Tourism Industry 9 3.4 Assess the impact of FDI in Vietnamese economic development 10 4. Conclusion 11 References 14 Appendices 17 1. Introduction to the study Foreign direct investment (FDI) is a concept that has emerged in recent decades. It was born with the trend of globalization and become an interesting topic for economic researchers. The evidence is that there are a large number of studies on this field, including case studies in specific country and cross-country analyses, single-dimensional and multi-dimensional studies, examinations in single-sector and multi-sector. However, until now there are still some debates about the issues related to this concept. One of the noticeable discussions is the relationship between foreign direct investment and economic development. This paper, to some extent, will review these studies about the relationship between foreign direct investment and economic development. In specific, it aims to answer the question: Is foreign......

Words: 3815 - Pages: 16

Premium Essay

Foreign Direct Investment

...Paul XXXXXX XXXXXXXXX University International Financial Markets: Foreign Direct Investment FIN630 – Global Financial Management March 17, 2011 Foreign Direct Investment: Vernon’s product life-cycle theory Raymond Vernon’s theory was different than the modern day theories of the 1960’s. Before Vernon, economists thought the reason a country traded with another was because of some advantage it had over the other for producing a product. The advantage was thought to be mostly related to cost; a country could produce it cheaper. Vernon did not agree with this way of thinking. Raymond Vernon believed that products have a life cycle. His theory put emphasis on invention and new products. He believed that most trade came from manufactured products especially products saved consumers time and effort from work. Vernon believed that more advanced or stronger economic countries would focus on developing new products and inventions because those economies would have the economic structure to support research and development (Katsioloudes & Hadjidakis, 2007). Vernon believed that countries varied in economic development and they traded with each other not because they were superior but because it was a good opportunity for both. For example, during the 1950’s and 60’s the United States was a much more developed economic leader than Japan; however, trade between the two countries would not come from the U.S. having an advantage over Japan. It came about because......

Words: 1245 - Pages: 5

Premium Essay

Foreign Direct Investment in India

...Foreign Direct Investment in India   Assessment of the Article: The article I chose gives in depth detail of the current Foreign Direct Investment standings of India. At present India ranks after China as the most lucrative destination for Foreign direct investment. Foreign Direct Investment is attracted into India through their software, hospitality, construction, telecommunication and hardware sectors. Presently the most popular method of making investments in the country is through Joint Ventures which are practiced by many firms. International immediate financial commitment is accepted through two means: one being through the Source Financial institution of the Indian and second being through International Investment Marketing Path Panel. 100% Foreign Direct Investment in single brands is permitted and based on the recent events 51% in multi brands. By enabling 100 percent International immediate financial commitments in single manufacturers the government has made it necessary that 30% of the raw components are procured from Indian. Companies like Adidas, The Apple Company, Reebok, IKEA and NIKE have taken this probability to identify their sites in India. The pros of allowing 51% Foreign Direct Investment in multi brand sectors into India include inflow of capital, employment generation, technological advancement, infrastructure development, better logistics, higher wages to the farmers and rise in GDP. The main difficulties of enabling 51 % foreign......

Words: 470 - Pages: 2

Premium Essay

Foreign Direct Investment

...FOREIGN DIRECT INVESTMENT IN TELECOM SECTOR OF PAKISTAN CONFIDENTIALITY STATEMENT This dissertation has been agreed as confidential between the students, university and sponsoring organisation. This agreement runs for two years from (20 August 2008) STATEMENT OF AUTHENTICITY I have read the University Regulations relating to plagiarism and certify that this dissertation is all my own work and do not contain any unacknowledged work from other sources. WORD COUNT: 16,808 ABSTRACT 07000441 FOREIGN DIRECT INVESTMENT IN TELECOM SECTOR OF PAKISTAN Keywords: FDI, Entry Modes, Determinants, Risks, Pakistan Telecom Abstract Pakistan telecom sector has attracted large inflow of foreign direct investment in recent years. Government policy of deregulation and privatization has created an environment conducive for foreign direct investment in telecom sector of Pakistan. This paper will investigate all those factors which have contributed in attracting the foreign direct investment in telecom sector of Pakistan. However, there are some risks associated with the foreign direct investment in telecom sector due to the current political instability and terrorism in the country. This paper will examine the risks associated with the foreign direct investment in telecom sector of Pakistan. Subsequently it will explore entry strategy for foreign companies to enter in Pakistan telecom market. FOREIGN DIRECT INVESTMENT IN TELECOM SECTOR OF......

Words: 19472 - Pages: 78

Premium Essay

American Airlines Foreign Direct Investment in China

...American Airlines Foreign Direct Investment Plan University of Phoenix June 8, 2009 American Airlines Foreign Direct Investment Plan American Airlines has decided to expand operations into the greater China market. A thorough analysis of the marketplace has taken place and the final remaining detail that needs to be defined is the airlines strategy for the foreign direct investment (FDI) that will be required to service successfully the Chinese travel market. While much of the expansion into the China market will leverage local resources, direct investment in the Chinese infrastructure will be needed. As such, the FDI analysis will focus on the expansion of airport facilities, airport and city ticket offices and a reservation center. The structure of the FDI analysis will include an executive summary of American Airlines overall China strategy, modes of entry and associated risks, funding of the initiative and contingency plan should the airline need to change strategies mid implementation. Executive Summary American Airlines and American Eagle (firms owned by AMR) serve some 250 destinations in approximately 40 countries including destinations in Europe, the Americas, and Asia-Pacific. The combined aircraft of both carriers comprise of 900 airplanes with 625 of those being jets. On any given day the airline transports 270,000 passengers on approximately 3,300 flights to over 170 destinations worldwide. Additionally, American Airlines is part...

Words: 2483 - Pages: 10

Premium Essay

Foreign Direct Investment

...Services & Management Research Vol.1 Issue 8, August 2012, ISSN 2277 3622 FOREIGN DIRECT INVESTMENT AND ECONOMIC GROWTH IN INDIA R. ANITHA* *Assistant Professor, Anna Adarsh College for Women, Chennai, Tamil Nadu, India. ABSTRACT Foreign Direct Investment (FDI) plays a very important role in the development of the nation. It is very much vital in the case of underdeveloped and developing countries. A typical characteristic of these developing and underdeveloped economies is the fact that these economies do not have the needed level of savings and income in order to meet the required level of investment needed to sustain the growth of the economy. In such cases, foreign direct investment plays an important role of bridging the gap between the available resources or funds and the required resources or funds. It plays an important role in the long-term development of a country not only as a source of capital but also for enhancing competitiveness of the domestic economy through transfer of technology, strengthening infrastructure, raising productivity and generating new employment opportunities. In India, FDI is considered as a developmental tool, which helps in achieving self-reliance in various sectors and in overall development of the economy. India after liberalizing and globalizing the economy to the outside world in 1991, there was a massive increase in the flow of foreign direct investment. This paper analyses FDI inflow into the country during the Post......

Words: 6831 - Pages: 28

Premium Essay

Foreign Direct Investment

...Introduction of Foreign Direct Investment Foreign Direct Investment (FDI) is known as the long term participation by country A into country B. It usually involves participation in management, joint-venture, transfer of technology and expertise. In other words, foreign direct investment is the cross-border corporate governance mechanism through which a company gains productive assets in another country. FDI is different from other major forms of foreign investment in that it is motivated largely by the long-term profit prospects in production activities that investor directly control (Wong, 2005). Wong also says that almost most of the developing and least developed countries worldwide equally participated in the process of direct investment activities. Over a long period of time, foreign direct investment (FDI) forms a major part of investment in most industrial and some developing countries. Besides that, he did explain that some FDI is intended to utilize local natural resources. Sometimes it is to employ relatively cheap labour, and sometimes to produce goods near to markets. Moreover, foreign direct investment can be a significant driver of development in poor nations. According to Katerina, John and Athanasios (2004), it provides an inflow of foreign capital and funds, in addition to an increase in the transfer of skills, technology, and job opportunities. Furthermore, they said it would be difficult to generate this capital through domestic savings, and even if it......

Words: 4064 - Pages: 17

Free Essay

Foreign Direct Investment

...Introduction There is a rising trend outward FDI (OFDI) from emerging market, mostly dominated by countries such as China and India (Gao, Liu, & Zhou, 2013). China’s outward FDI increased from $27 billion in the year 2000 to $230 billion by the end of the year 2009. Since the late 1990s, India’s OFDI has increased to $77 billion by the end of the year 2009 (Buckley, Forsans, & Munjal, 2012). Porter’s national competitive advantage emphasizes productivity growth as the focus of success in international trade. John Dunning went on to explain in detail the drivers of OFDI using his eclectic theory of ownership, location, and internalization advantage including four major motives: market-seeking, resource-seeking, efficiency-seeking and strategic asset seeking (Gao, Liu, & Zhou, 2013). Market seeking Firms aim to capitalise on ownership of well-established brands, marketing skills and overseas distribution networks by seeking large foreign markets (Buckley, Forsans, & Munjal, 2012). Since China’s WTO accession, because of over-capacity in some sectors, Chinese manufacturers have started to invest in developed countries as well as in developing countries. Shanghai Automobile Industry Corp. bought over 50 percent stake in Korean Ssangyong Motor Co. in 2004, and TCL acquired the colour TV manufacturing from French Thomson in 2004 in order to expand their markets and achieve economies of scale. CDC Software, a wholly owned subsidiary of Chinese CDC Corporation,......

Words: 2497 - Pages: 10

Premium Essay

Foreign Direct Investments

...Indonesia Foreign Direct Investments By: Pamala Kimbrel Florida Institute Of Technology International Business Professor May 09, 2015 Growing Records in Indonesia Foreign Direct Investments International business is when two or more countries, regions, or nations make transactions between one another for goods, services, or resources. This can involve many different types of companies, including private and small businesses. There are also multinational corporations (MNC) that have gone worldwide, and have operations in more than one country. This article talks about how approved foreign direct investment (FDI) in Indonesia is climbing. FDI refers to investment in things like equipment, structures, and organizations bringing business to a foreign country (Ball et al, 2013). Assessment of the Article In recent years the previous president signed a Negative Investment List (NIL) that placed certain conditions on FDI and some business fields were even closed form starting any new FDI projects in Indonesia. Despite the restrictions and closers, the FDI continued to grow and reached a record high. Since the election for a new leader in October 2014, JoKo Widodo has became president and promised to boost the economy by lifting restrictions and attracting more FDI. Total investment rose 16.9% to a quarterly record of 124.6 trillion rupiah ($9.6 billion) in the first three months from the previous year, and approved foreign investment rose......

Words: 671 - Pages: 3

Premium Essay

Foreign Direct Investments

...Nayak D.N (2004) in his paper “Canadian Foreign Direct Investment in India: Some Observations”, analyse the patterns and trends of Canadian FDI in India. He finds out that India does not figure very much in the investment plans of Canadian firms. The reasons for the same is the indifferent attitude of Canadians towards India and lack of information of investment opportunities in India are the important contributing factor for such an unhealthy trends in economic relation between India and Canada. He suggested some measures such as publishing of regular documents like newsletter that would highlight opportunities in India and a detailed focus on India’s area of strength so that Canadian firms could come forward and discuss their areas of expertise would got long way in enhancing Canadian FDI in India. Balasubramanyam V.N Sapsford David (2007) in their article “Does India need a lot more FDI” compares the levels of FDI inflows in India and China, and found that FDI in India is one tenth of that of china. The paper also finds that India may not require increased FDI because of the structure and composition of India’s manufacturing, service sectors and her endowments of human capital. The requirements of managerial and organizational skills of these industries are much lower than that of labour intensive industries such as those in China. Also, India has a large pool of well – Trained engineers and scientists capable of adapting and restructuring imported know – how to suit...

Words: 1158 - Pages: 5

Premium Essay

Foreign Investment Trends in Bangladesh

...Foreign Investment trends in Bangladesh: Board of Investment of Bangladesh is the principal investment promotion agency engaged mainly in investment promotion, facilitation, and policy advocacy support for the policy makers. The Board of Investment Act 1989 (Act XII of 1989) has entrusted the Board of Investment with responsibility for inter alia "collection, compilation, analysis and dissemination of all kinds of industrial data and establishment of data bank for that purpose"- BOI has endeavored in to portray a brief on Foreign Investment registered from 1977 to 2010 for Joint venture investment and from 1990-2010 for the 100% foreign investment projects. Country wise foreign and joint venture investment during 2009-2010* Country | No. of Projects | Proposed Investment (US$ m) | Saudi Arabia | 3 | 478,652.17 | Australia | 4 | 2,036.23 | USA | 5 | 2,990.33 | Finland | 2 | 3,023.89 | India | 9 | 8,451.53 | South Korea | 12 | 33,768.91 | Malaysia | 3 | 3,056.52 | Netherlands | 5 | 8,544.76 | China | 12 | 21,000.36 | United Kingdom | 5 | 3,507.76 | Pakistan | 2 | 990.91 | Japan | 8 | 2,624.85 | Denmark | 1 | 1,217.39 | Sri Lanka | 2 | 646.23 | Canada | 2 | 1,017.23 | Taiwan | 1 | 502.97 | Singapore | 4 | 1,929.62 | Turkey | 1 | 150.94 | Greece | 1 | 156.81 | Italy | 2 | 1,039.95 | Hong Kong | 5 | 14,805.94 | Total | 89 | 590,114.91 | As a developing country, Bangladesh needs FDI for its ongoing development process. Since......

Words: 1763 - Pages: 8

Premium Essay

The Effects of Foreign Direct Investment (Fdi) on the Economic Growth of China

...the effects of foreign direct investment (FDI) on the economic growth of China. Such growth was achieved through China taking in tremendous amounts in FDI, increasing its productivity, especially in the export manufacturing sector of the economy. This paper provides mounting evidence that China’s growth has been largely fuelled by FDI through capital formation, export promotion, technological and skill transfer, increased tax revenues. Similarly, the creation of a larger middle class, encouragement of economic reforms and increased infrastructure spending has fueled the inflow of FDI into China further increasing the growth of China’s economic growth. FDI plays an extraordinary and growing role in global business. Tuan, C., & Ng, L.F-Y. (2007) pointed that FDI has fuelled economic growth in China by attracting capital investments and creation of employment; increasing manufacturing exports; bringing skilled labor and international brand names and transferring knowledge and technology to local economy. FDI has improved developments in infrastructure and expanded domestic market through job creation. The fixed capital investment in economic growth has been considered one of the basic principles in economic. FDI is of special interest for its supposed positive effects on growth (Qi, 2007). In 1980, the ratio of FDI inflow to China’s Gross Domestic Investment was negligible. It had increased to 7% by 1992, and up again to 36% by 2004 (Rising FDI into China: The Facts......

Words: 1521 - Pages: 7

Premium Essay

Foreign Investment in China

...ostracism from kinship, ethnic, or other networks, or the like – and they have little trust in or trade with people not subject to these mechanisms. The state is either too weak to prevent theft of property by private actors, or so strong that the state itself threatens property rights. In either case, entrepreneurs and organizations face a high risk that they will not be able to realize a return if they invest in specific knowledge, skills, or capital, so they refrain from investment, productivity is low, and the economy stagnates. Why have so few countries been able to create and sustain the rules and norms that foster growth and social progress? Which institutions must function effectively if countries are to develop? How can poorer countries attain well functioning institutions? Can outsiders promote institutional development? The New Institutional Economics (NIE) has made some progress towards answering these four questions, but much remains unknown. Because the last two questions have been largely unaddressed, foreign Throughout this chapter I use North’s definition of institutions as the “humanly devised constraints that structure human interaction” including formal constraints such as constitutions and laws and informal constraints, such as norms, conventions and self-imposed codes of conduct (North 1990, p. 3).” Organizations differ from institutions; “they are groups of individuals bound together by some common purpose to achieve certain objectives,” and include......

Words: 6045 - Pages: 25

Premium Essay

Foreign Subsidiary Investment Plan Case: Multinational Capital Budgeting China & Australia

...Foreign Subsidiary Investment Plan Case: Multinational Capital Budgeting China & Australia Hypothetical Incorporated MBA AF 626 Fall 2011 International Financial Management Professor XX XX XX XX XX Table of Contents PART I – Analysis: Australia vs. China A. Country Analysis 1. Economic Environment 3 2. Social Environment 10 3. Political Environment 12 B. Industry Analysis 1. Aluminum Industry in Australia 17 2. Airline Industry in China 18 PART II-Capital Budget Analysis 1. Weighted Average Cost of Capital 19 2. Net Present Value 20 3. Scenario Analysis 21 PART III – Conclusion: Investment Decision 23 References 24 Appendixes 26 PART I – Analysis: Australia vs. China A. Country Analysis I. Economic Environment Australia Australia is a market oriented financial system which includes the world’s 13th largest economy and the 9th highest per capita Gross Domestic Product (GDP), with almost two consecutive decades of growth and the unemployment rate falling to a generational low. As a result of nearly three decades of structural and policy reforms, Australian’s economy has proven to be a competitive player in the increasingly integrated global markets. In terms of country risk, Australia’s favorable attitude towards private enterprise and its well-protected......

Words: 5440 - Pages: 22

Hanatsuki Hime | Скачать | Künstler- & Zeichenbedarf