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Why has China become a source of outward foreign direct investment since the mid-2000s?

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by

Ziling Huang

on 18 October 2012

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Transcript of Why has China become a source of outward foreign direct investment since the mid-2000s?

Presenters: Dennis (Ziling) Huang
Edward (Meng Huat) Lee Definition Evolution Drivers Issues Future Today Outward Foreign Direct Investment (ODI) A business strategy where a domestic firm expands its operations to a foreign country either via a Green field investment, merger/acquisition and/or expansion of an existing foreign facility. 1978-1984 2001-Present 1985-1991 1992-2000 Evolution of China's Outward FDI
"It doesn't matter if a cat is black or white, so long as it catches mice." Increasing investment Scale
More Advanced Industries International Trade Enforcement of Market Economy Manufacturing Industry 'Going Out (zouchuqu)' Strategy Resource Exploration Overseas Expansion Accession to WTO Strong Growth During Financial Crisis
9.6% GDP Growth in 2008 Surplus Commodities Tariff & Non-tariff Barriers Key Drivers of China's Outward FDI Lack of Resources Resource Per Capita Light Industries to Heavy Industries
Automobile; Iron & Steel; Petrochemical FDI&Import Cost Comparison Higher Stability & Control
Supply, Price & Quality Shanghai: 1990s Shanghai: Today Excess Consumption Goods
30% washing machines
40% fridges
45% microwaves
87% televisions Trade Barriers High Tariff e.g. 25%
Quota Restriction
Complicated Quarantine Process Strategic Assets Difficulties: Cultural Difference
Management Style
Distribution Channels
Trademarks Lenovo's Takeover of IBM (PC Department) Lenovo Tops The Industry Feature Geographic
Distribution Sector
Distribution Ownership
Structure (cc) photo by theaucitron on Flickr CHALLENGES Lack of
Government Support Liability of Foreignness Contractionary
Monetary
Policy Public Tension Inflow
VS
Outflow Government
Support Yuan
Appreciation Industry
Selection Future Development Why has China become a source of outward foreign direct investment since the mid-2000s? China: - Second Largest Recipient of FDI
- Infantile Outward FDI - Reform and Opening Up Policy - Socialist Market Economy Planned? Market? Questions Major Question:
Due to more open policies adopted by Chinese government towards outward FDI in recent years, can China afford to lose its FDI inflows by giving way to outward FDI? Warm-up Question:
Which of the following countries are the recipients of China's outward FDI? Thank You! Germany / Vatican City / Australia / France / Malaysia / South Africa / Brazil / Singapore / Japan / North Korea / 2010 ODI: 68.8 Billion USD
Full transcript