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Location:Home > Economic and Trade Info > Bilateral Economy and Trade
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| Why do foreign investors still favor China? |
A huge domestic market becomes China's unique advantage
"It is necessary to enhance the quality and level of foreign investment in China," said Chen Deming, the minister of commerce, while arranging the 2010 work.
China's 2009 actual foreign investment totaled 90.03 billion U.S. dollars, ranking second in the world.
According to the Global Investment Trends Monitor Report for 2009 issued by the United Nations Conference on Trade and Development (UNCTAD) January 19, over recent years China's position and role in global foreign investment has continued to grow. Between 2005 and 2006, China took fourth position among the major global FDI destination countries, climbed to the third position in 2008, and has reached the second position in 2009, only behind the U.S.
According to the results of a survey by the German Chamber of Commerce, 80 percent of surveyed German enterprises in China said the huge domestic market is the most important reason behind their investment in China.
The 2009 China Business Report released by the American Chamber of Commerce in Shanghai at the end of 2009 shows that U.S. enterprises view China as their major investment destination country. 64 percent of the enterprises plan to further their investment in China. Meanwhile, U.S. companies are attaching growing importance to serving China's increasing domestic market and expanding their business in the second and third-tier cities.
China's intellectual factor plays a more important role
In recent years, more multinational companies have established research centers in China, and China has become a strategic center for more multinational enterprises.
Zhang Yaqin, senior global vice president of Microsoft and chairman of the Microsoft Asian Pacific R&D Group, says that multinational enterprises have stepped into a new stage in China. In the past, multinational enterprises regarded China as a marketing center. In the second stage, they regarded China as a R&D center. But now, China has become the strategic center for many multinational companies. In other words, when the boards of directors of multinational companies are making global strategic decisions, China will be a very important element to consider.
Zhang regards Microsoft's division in China as Microsoft's second headquarters. "We can say that it is a smaller edition of Microsoft in the U.S. It has all the links including technology research, product development, marketing, investment and service outsourcing. It is not only a branch of a foreign enterprise, but also an integrated enterprise. A lot of Microsoft's strategic decisions were made in China. First, it does research and development of a technology, then changes the technology into products and then launches the products in the Chinese market, and then in the U.S. market or markets of other countries."
Objectively, China's intellectual advantage is also accelerating the change of foreign investment types and realms. Foreign investments have already started to shift from only in labor-intensive industries to new high-tech industries and tertiary industries.
Potential investments in new industries are quite great
Foreign investments are shifting not only from the entire world to China, but also from China's eastern regions to western regions and from labor-intensive industries to new high-tech industries and the tertiary industries.
As China's "development of the western regions" strategy was implemented and a series of preferential policies were issued in recent years, the western regions have become more attractive to foreign merchants.
Experts believe that the growth and transformation of China's economy are also accelerating the change of foreign investment types and realms. China's huge spaces for investments in service industry, financing industry and new energy industry will bring a lot of opportunities and challenges to foreign merchants.
However, developed western countries have encountered economic difficulties and now have an increasing unemployment rate. Secondly, the income tax rate of some foreign-owned enterprises has increased to 25 percent and it will slightly increase their costs. Therefore, some local places in China are worried that foreign investment will retreat from some industries in China, and wonder if the industrial reflux problem will occur.
Most experts believe that the truly high-quality foreign enterprises will not indiscreetly withdraw their investments.
Secretary of the Boao Forum for Asia (BFA), Long Yongtu, expressed that the concerns are totally unwarranted. The reason for foreign merchants investing in China is that they need China's advantageous labor force, not that they want to give charity to China. It is a result of market operation, which will not be changed by the global financial crisis. |
Source:By People's Daily Online |
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