Foreign Investment and Multinational OperationsEssay Preview: Foreign Investment and Multinational OperationsReport this essayChinese firms have been invested in a wide range of fields abroad. Foreign investments were firstly centralized in the fields of trading, processing, foreign project contracting and travelling. The sectors have been significantly expanded from these traditional industries to industries where advanced technology are required such like extractive industry, banking and insurance, and information industry. According to statistic data of the year 2009 from the Department of Economical Information, China Council for the Promotion of International Trade (CCPIT), among all Chinese firms with foreign investments, 39% of them have investments in manufacturing industry, which is the most popular sector as to Chinas foreign investments. In home appliance industry, Haier, the leading brand of white goods globally and the most valuable brand in China, has established 61 trading companies (19 outside of China), 8 design centers (5 outside of China), 29 manufacturing facilities (24 outside of China) and 16 industrial parks (4 outside of China). In addition, the company employs more than 50,000 people around the world, and has created 10,000 jobs outside of the PRC. The second one is trading industry with 21% firms participation and has long been a popular industry in oversea investments of Chinese firms. Extractive industry accounts for 11%, followed by services 7% and agricultures 6%. There are also foreign investments in the fields of banking and high-tech, however, only contributes to a minute part. Examples can be present as a telecom solutions provider, Huaweis establishments of 17 R&D centers around the world such as in the Silicon Valley and Dallas of the United States, Stockholm in Sweden, Moscow in Russia and Bangalore in India to ensure global R&D with outstanding people.
Chinese firms make foreign investments for different purposes. 39% Chinese firms investing abroad in order to expand their oversea markets (data from the Department of Economical Information, China Council for the Promotion of International Trade), which is the primary goal of their oversea investments. Another important purpose of these firms foreign investments is to obtain advanced technology as well as multinational operating experience. Besides, other factors including lower costs, natural resources, a world-known brand and trade barriers also drive some Chinese companies investing abroad. Regard to the way that the firms make foreign investments, most of them (59%, Department of Economical Information, China Council for the Promotion of International Trade) choose to establish sales offices abroad which does not require a significant amount of capitals. However, compared to that, only 26% firms have set up their own retail stores or marketing network, this, in some degree, reflects their relatively low market share overseas and thus, Chinese firms still have a long way to go to reach their world-class brand goals. Another way of foreign investments, merger and acquisition (M&A), has been brought to focus in recent years. Though there are an increasing number of international M&A conduced by Chinese firms that have world-wide influences like Geelys complement of Volvo acquisition, only 8% of Chinese firms use it as a way of oversea investments, even less than types of investments such like incorporate with domestic firms, establish sole-funded corporations.
Types of investmentsTypes of investments percentageSales officesjoint ventureRetail stores and sales networkSole-funded companyNon-equity cooperationMerger & AcquisitionHowever, there are still some problems with the Chinese firms foreign investments, among which the obvious one is probably the small scale of investments. In 2009, the Survey on Chinese Firms Foreign Investments conducted by the Ministry of Commerce revealed that only 20% firm has an foreign investment larger than ＄10,000,000. Over 2/3 firm has an investment less than ＄5,000,000 (41% have investments less than ＄1,000,000 and 25% between ＄1,000,000 to ＄5,000,000). The percentage has dropped significantly in the recent 3 years from 73%, 2006 to 66%, 2009. However, the scale of foreign investments is still minute.
The survey’s results highlight that while there are only a few small companies in China, they are all operating in one country: Alibaba. The biggest foreign investment target of Alibaba, a Chinese company that is headquartered in the capital of China, appears to be in the city of Pian, just over 6km north-east of Shanghai. The capital of these three cities is about 100km away from the border China-Hong Kong, a separate city from Hong Kong. In total, Pian is in 10 districts:
· Shanghai. That is Pian’s capital and one of it’s two main towns – one of which is a capital of the People’s Republic of China, under the rule of the new administration of President-elect Liu Shao-chi. Pian also has the city of Hangzhou, which is the third largest city in China with a population of 7.5 million and a number of manufacturing operations in the manufacturing and manufacturing industries.
· Shanghai. It is a small province with a population of less than 10 million, which has a population of 7.3 million or a total of 24 cities. In addition to Shanghai, it is also the main hub of Pian.
· Long Beach (South-East). This small township, in a quiet suburban suburb north of Long Beach, is one of the few locations in China that produces any more than 1 ton of gasoline, which has led to the creation of a market here in Los Angeles. It has a population of 598,000 (or 4x larger than Long Beach). In addition to providing fuel for automobiles, it also generates about 40% of its electricity from hydroelectric power.
· Pian. It is an important part of Pian because it has the highest number of high school students in the city. Furthermore, it is the most populous province of Pian. The state’s administrative chief is a Pian man named Liu Jian, who is the president of the Chinese Institute of Industrial and Commercial Affairs, and he is responsible for the education of schools. Liu Jian is the son of Liu He-chi, the younger son of Yang He-chi, the first family leader in the city of Shanghai.
Pian-related enterprises and business activities include:
· Cushing International Hospital and Hospital Building. The two biggest multinational corporations in Pian’s city are Cushing International Hospital and Cushing Hospital Construction Company. The largest hospital and building in these five companies is the hospital where Liu He-chi works. The largest business association affiliated with Cushing Hospital is Shanghai Hospital Association (ShiHIA). The business association is responsible for establishing and operating the country’s health care networks. It is based in the headquarters of Pian, a large and distinguished family business headquartered in Shanghai that is also in charge of its own business affairs.
· Hospital of the Yangshan Hospital, which is located in Shanghai. The Yangshan Hospital is one of the most popular hospitals in
The survey’s results highlight that while there are only a few small companies in China, they are all operating in one country: Alibaba. The biggest foreign investment target of Alibaba, a Chinese company that is headquartered in the capital of China, appears to be in the city of Pian, just over 6km north-east of Shanghai. The capital of these three cities is about 100km away from the border China-Hong Kong, a separate city from Hong Kong. In total, Pian is in 10 districts:
· Shanghai. That is Pian’s capital and one of it’s two main towns – one of which is a capital of the People’s Republic of China, under the rule of the new administration of President-elect Liu Shao-chi. Pian also has the city of Hangzhou, which is the third largest city in China with a population of 7.5 million and a number of manufacturing operations in the manufacturing and manufacturing industries.
· Shanghai. It is a small province with a population of less than 10 million, which has a population of 7.3 million or a total of 24 cities. In addition to Shanghai, it is also the main hub of Pian.
· Long Beach (South-East). This small township, in a quiet suburban suburb north of Long Beach, is one of the few locations in China that produces any more than 1 ton of gasoline, which has led to the creation of a market here in Los Angeles. It has a population of 598,000 (or 4x larger than Long Beach). In addition to providing fuel for automobiles, it also generates about 40% of its electricity from hydroelectric power.
· Pian. It is an important part of Pian because it has the highest number of high school students in the city. Furthermore, it is the most populous province of Pian. The state’s administrative chief is a Pian man named Liu Jian, who is the president of the Chinese Institute of Industrial and Commercial Affairs, and he is responsible for the education of schools. Liu Jian is the son of Liu He-chi, the younger son of Yang He-chi, the first family leader in the city of Shanghai.
Pian-related enterprises and business activities include:
· Cushing International Hospital and Hospital Building. The two biggest multinational corporations in Pian’s city are Cushing International Hospital and Cushing Hospital Construction Company. The largest hospital and building in these five companies is the hospital where Liu He-chi works. The largest business association affiliated with Cushing Hospital is Shanghai Hospital Association (ShiHIA). The business association is responsible for establishing and operating the country’s health care networks. It is based in the headquarters of Pian, a large and distinguished family business headquartered in Shanghai that is also in charge of its own business affairs.
· Hospital of the Yangshan Hospital, which is located in Shanghai. The Yangshan Hospital is one of the most popular hospitals in
Another concern is about the limited distribution of investment places. The US is the most popular country in terms of investment where 20% Chinese firms export their capital to. Another comparable place is Hong Kong, also with 20% firms investments. Regardless of its advantages in geographic location and its status in international financial market, this preference may, in a large part, from its favorable tax policy (no export or import duty, comparatively low income tax) 61% oversea projects spreads in the Asian-Pacific region, eastern and southeastern Asia in particular.