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Foreign Investment in China. Presentation Outline General Background Who are investors When, Where and How. New Market. Since 1978, Deng Xiaoping’s open-door policy, many foreign businessman pushed their way to China

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Presentation Transcript
foreign investment in china
Foreign Investment in China
  • Presentation Outline
  • General Background
  • Who are investors
  • When, Where and How
new market
New Market
  • Since 1978, Deng Xiaoping’s open-door policy, many foreign businessman pushed their way to China
  • Industries-- infrastructure projects (railway roads), steel industry, telecommunications, and technology
total realized fdi in china
Total (Realized) FDI in China

Year FDI ($ billion)

1984 1.419

1986 1.875

1988 3.194

1990 3.487

1992 11.008

1994 33.767

1996 41.726

1997 45.257

1998 45.463

1999 40.398

2000 40.772

foreign money flows to china million
Foreign Money Flows to China ($ million)

Country 1979-1991 1992-1998

HK 13,208 125,300

US 2,382 17,963

Taiwan 199 19,458

Japan 1,740 18,890

Singapore 628 11,626

UK 862 5,830

overseas chinese investors
Overseas Chinese Investors
  • Hong Kong and Macao
  • Taiwan
  • 55 million ethnic Chinese living outside mainland China (21 from Taiwan and 6 million from Hong Kong)
    • Four tigers --HK, Taiwan, Singapore, Korea(only Korea is Not Chinese)
    • Thailand, Indonesia, Malaysia
slide6

Taiwan FDI in China

US$ bn

Source: Taiwan’s Ministry of Economic Affairs

us investors
US Investors
  • Many big and small-to-medium sized firms have invested in China
  • For Example-- Boeing, Monsanto, GM
  • Walt Disney-
    • joint venture with Post and Telecommunications Press
    • Chinese-speaking Mickey Mouse and Donald Duck in 1987 but pulled out in 1993
slide8

US Investment in China

$bn

8% of total

7%

18%

7%

1%

5%

17%

slide9

3.083

0.442

3.444

0.422

3.239

0.364

3.898

0.409

4.216

0.423

4.384

0.406

U.S. FDI In China

% of China’GDP

$billion

1995

1996

1997

1998

1999

2000

japanese investors
Japanese Investors
  • First investment, 1979
  • Investment picked up in 1990s, including
    • textiles,
    • electrical applications,
    • food and chemicals,
    • supermarket operators (Yaohan and Daiei),
    • trading firms,
    • agriculture,
    • transportation, energy and communications
slide11

Japanese (continued)

  • held-back technology
  • A careful long-term investment strategy
  • For example, Dalian
    • Initial investment in trading company to build structure
    • follows by financial firms
south korea
South Korea
  • Late 1970s, first unofficial contact
  • 1991 signed agreement on Most Favored Nation (MFN) status
  • Initial investment in Yellow Sea Economic Zone (including Shandong and Liaodong peninsulas)
  • Later extended to the South
  • China is Korea’s 4th largest trading partner
european investors
European Investors
  • Britain, France, Germany and Italy are ranked by Chinese top 10 investors
  • Britain heavy investment in China
    • In 11/1997, joint venture of P&O (UK’s transport and property company and Shougang Group (China’s conglomerate with steel and machineary)
    • one of the world’s largest bulk shipping operations of dry bulk carriers
slide14

Germany

  • low profile but one of the largest investment in automobile industry (e.g. Volkswagen and Daimler-Benz)
  • other industries: satellite technology, solar collectors, electronics, telecommunications, power plant and others
slide15

Provinces

1992-1997

Flows

Share (%)

CoastalAreas

174079

87.47

Guangdong

55016

27.64

Jiangsu

24007

12.06

Fujian

20316

10.21

Shanghai

18254

9.17

Beijing

7010

3.52

Others

49476

24.87

Inland Areas

24935

12.53

FDI Distribution in China

slide16

1998 survey by 96 European companies express problems in China (FT- 2/16/98):

    • counterfeits of their products
    • competition from imports (esp. Hong Kong)
    • Retaining staff
      • Royalty bonus
      • career development,
      • housing allowance, housing loans
    • Preference for wholly-owned subsidiary vs joint venture
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