EMERGING MARKETS

Transnational Corporations and Emerging Markets

[Name of the Institute]Transnational Corporations and Emerging Markets

Why China continue to be attractive destinations for FDI despite the recent economic slowdown.

The world's leading business consulting firm AT Kearney U.S. "Global Economic Policy Committee" in the U.S. and China simultaneously issued a definitive report on the foreign direct investment confidence index. It says that although the slowdown in world economic environment, but China's economy is thriving, the first time China replaced the U.S. as the world's most attractive destination for foreign direct investment.

International direct investment or foreign direct investment (FDI) is made or owned through the foreign enterprise management and control over investments. International direct investment is the basic form of international capital flows. 20 years of reform and opening up, China has become an international investment. The main reasons behind the globalization of China's economy is the international capital inflows, easing the process of economic development of the capital shortage, promotion of the rapid growth of export-oriented economy through the "spill over effect" and "learning effect". Due to high technical levels of Chinese economy and increasing organizational efficiency is enhancing the overall national economy factor productivity (TFP). The recent global financial crisis has very limited effects over the China's economy (Mike 1997, pp. 575).

No matter how the international economic environment changes, the total flow of how fluctuations in global FDI, China attractiveness towards the FDI has maintained a steady growth. According to statistics, the average annual inflow of FDI to China is $40.31 billion. During this period, many countries appear to attract FDI volatility. China has been able to attract a large number of international direct investments; the main reason can be summed up as follows:

China's huge market potential and Location choice theory

The China's foreign direct investment most attractiveness factors are three: the "market size", "economic development" and "political stability." Undoubtedly, the market size, China is the world's most populous country, the largest potential market in the world in the leading position. According to AT Kearney's latest forecast, by 2009, the world will add about 400 million annual income exceeds $ 10,000, of which half will be Chinese. In economic development, China's reforms, opening up, steady economic growth, and economic growth for 20 consecutive years leads to more than 7%, and effectively withstood the Asian financial crisis and global economic downturn repeatedly to the fact that China's economy has the sound development ingredients. In political terms, China's political stability is the consensus for all foreign enterprises. In addition, China's political stability, and steady and rapid economic development are the main focus of China's huge market. The world's largest 500 multinational companies, about 400 have been or are actively preparing to invest in China, 11 multinational companies have regional headquarters in Beijing, and 25 in Shanghai (Lu 2011, pp. 5). According to the U.S. "Fortune" magazine published a survey, 92% of multinational companies plan to set up regional headquarters in China. Multinational companies have invested in China have additional investment, Motorola, Nokia, BASF Corporation have ...