China as a Global Investor in Business Assignment
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Added on 2021-04-16
China as a Global Investor in Business Assignment
Added on 2021-04-16
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Running head: CHINA AS A GLOBAL INVESTOR IN BUSINESSCHINA AS A GLOBAL INVESTOR IN BUSINESSName of the BusinessName of the UniversityAuthor Note
1CHINA AS A GLOBAL INVESTOR IN BUSINESSIntroductionThe development of the Chinese economy is creating strains in the international market.China is considered as one of the largest trading nation and the second largest economy. Almost$2.4 trillion net foreign assets were estimated in 2015 in China compared to Japan’s net foreignassets of $3.6 trillion. The reason behind the account surplus is the enhancement of net foreignassets (National Bureau of Statistics of China 2018). In China, most of the foreign assetsinvestments come from the central bank by international reserves, invested by the U.S. as well asdifferent kinds of treasury bonds and similar instruments. As the investment opportunities for thenative business diminishes in China, excess capability and declining profitability has alsoincreased in other nations, resulting in a commercial outflow of capital to run at a high level. “GoGlobal” investment strategy by China has made an extravagant foreign investment whichamounted to USD 900 million it was also equivalent to 2.2% of China's inward FDI in the sameyear (National Bureau of Statistics of China 2018). Foreign Direct Investment inward flow in ChinaForeign direct investment is a long-term relationship between investor and enterprise whoare cumulatively heading towards the objectives of the business organisation which in turnimpacts the economy of the country. Industries operating in an economy can profit through thisprocess with advantages in the supply chain management as well. The industry gets profit due toForeign Direct Investment and an overall economic development was introduced in China(Gilboy 2016). The flow of FDI is the sum of three components such as equity, capital,reinvestment earnings and investments; these aspects are connected with the inter-company debttransaction. The technical enhancement, administrative development and increase level of
2CHINA AS A GLOBAL INVESTOR IN BUSINESSproduction is the area of focus in this business module. The significant portion of emergingmarket change is associated with the investment as well. In case of global investment, accuratereflection can be judged through the financial condition of China and series of domestic incomesthat China acquired through this process.In China, there are different special economic zones that were announced on the 15thsession of fifth NPC. Zhuhai, Shenzhen, and Shantou had been announced officially by thegovernment and after that Xiamen was added to the special economic zone(Cavusgil et al.2014). According to the statistic provided by the China government, in between 1979 to 2006,asum of 596,110 projects is run by the foreign direct investment. A utilizing value of US$1.67trillion on foreign capital and a huge contract value had signed in that time (National Bureau ofStatistics of China 2018). China became the largest receiver of FDI among the developingnations. Since the biggest portion of FDI has come from Taiwan and Hong Kong, China can getsa good amount of products from these countries as well. 57% of FDI is single-handedly deliveredby Hong Kong. Almost 1000 foreign companies’ regional headquarters are situated in HongKong and this is the reason channelized investment is persisting in Hong Kong.Basic drivers behind the changeThere are some key drivers of FDI are as follows:economic growthrapid economic industrial development In case of economic growth, the business organisations that come up in the Chinesemarket are the main source of income as GDP. Technology plays a vital role in this situation.
3CHINA AS A GLOBAL INVESTOR IN BUSINESSThe country has impactful performance in technology and that main reason for export in thecountry and industrial development. Resource movement and logistic facilitation are two otheraspects that impacts industrial market. Logistic management is another productive aspect thatwill come in transforming the link and provide a constructive drive for the nation.The most important analysis is channelizing through China, in recent years and foreign-invested firms are taking advantage of them. The reason behind why China has become a globalhotspot is because the nation is manufacturing their own products and in case of diverse aspectsof finance, marketing and accounting. China is now the official member of WTO. The nation hasa huge domestic market which impacts the growth of economy, political stability, policyconsistency and legal reformation of China is the major aspect of the distribution of their market(Peng 2012). Industries are rapidly growing in China and in case infrastructure and production are thereason behind global development. Realizing the potential of the industry and possible outcomeit is important to grab the market and make use of the opportunities of the external environment.A significant contribution to large-scale employment is catering to the employment requirementof the native people and they will develop the work culture as the nation’s economy is muchknown by them.In recent past, direct and indirect employment is around 13.1 million people andthe GDP has risen up to 2.23% to 4.10%, which is an exceptional change that comes into thedrilling of factors. Chinese Government PlanThe Chinese government has ethics and cultures that are delivered in a written form asrules and legislation (Ruggie 2013).Foreign Banks are established and their business is also
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