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Foreign Investment in China

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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Foreign Investment in China

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  1. Foreign Investment in China • Presentation Outline • General Background • Who are investors • When, Where and How

  2. 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

  3. 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

  4. 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

  5. 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

  6. Taiwan FDI in China US$ bn Source: Taiwan’s Ministry of Economic Affairs

  7. 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

  8. US Investment in China $bn 8% of total 7% 18% 7% 1% 5% 17%

  9. 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

  10. 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

  11. 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

  12. 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

  13. 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

  14. 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

  15. 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

  16. 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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