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Chinese Foreign Direct Investment

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Paul Prentice

on 21 February 2014

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Transcript of Chinese Foreign Direct Investment

Chinese Foreign Direct Investment
What is Foreign Direct Investment?
Definition:
Investment from one country directly into another.

History
Command Economy:
Government determines what goods should be produced and at what price.
Positive Effects
FDI increases China's economy
Satisfies China's thirst for expansion
High-tech industry = skilled laborers
Raises GDP
Negative Effects
"By allowing foreigners to invest in assets in our country, do we help ourselves in the long-term or do we mortgage our future and surrender our sovereignty?" Don Brash, economist
Child labor
Environment
Poor working conditions

Outflow Direct Investment
Where does China invest today?
Africa, Australia, & South America
Planning for a sustainable future
Conclusion
FDI will continue to grow.
1. China's "thirst for expansion"
2. Globalization
Reasons to Invest in China
Large population
Skilled laborers
Market potential; people need your goods
Stable political climate; always been Communist.
Special Economic Zones
Inflow FDI: Money that non-residents invest in others in foreign economies.
Location is far from Beijing to "minimize potential risks and political interference" (Zeng)
http://www.heritage.org/research/projects/china-global-investment-tracker-interactive-map
“They complain about military-style drills, verbal abuse by superiors and “self-criticisms” they are forced to read aloud, as well as occasionally being pressured to work as many 13 consecutive days to complete a big customer order — even when it means sleeping on the factory floor.”

- Barboza, "After Foxconn Suicides, Scrutiny."
Put up suicide nets after multiple suicides
Typical Foxconn dormitory
By: Kathryn Chesebrough
Paul Prentice

Inflow Direct Investment in China
1990-2002
Trash hill in Shenzhen
Economic Reforms under Deng Xiaoping
Agricultural & Economic liberalization
“At Foxconn, Mr. Ma shared a dormitory room with nine other workers, ate in the campus cafeteria and worked night shifts, 7 p.m. to 8 a.m. His sister said he did little but work and sleep, had no friends on campus and did not even know the names of most of his roommates.”
The New York Times reported that “in Shenzhen workers’ dormitories, frustration with hard labour, merciless factory bosses, low pay and miserable living conditions is palpable.”
Shenzhen Smog
"Child workers were subject to a number of legal violations, including not being given formal labor contracts, working 12 hours per day, not receiving overtime pay. " - Childlaborwatch
Full transcript