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Risk Perceptions of Chinese and Dutch Investors Operating in the African Market a Comparative Study

On 21/09/2013, in Finance, by rain

This study contributes to the finance research that examines how country-specific investors’ risk perceptions of investments in Africa differ. In this case, risk perceptions of Chinese and Dutch professionals, working on Africa investments for policy banks and institutions in China and the Netherlands respectively, are compared. Existing literature suggests that Chinese and Western investors perceive importance of various risks differently. However, no conclusive research has been performed on Africa specific risk perceptions of Dutch and Chinese investors.By means of a statistical analysis of survey results, I examine how country and project risk perceptions differ between Chinese&Dutch professionals working for financial institutions that invest in Africa. Eighteen Dutch investors and fifteen Chinese investors from four different financial institutions ranked twenty-six risk factors on a Likert type scale. By following a distribution fitting approach, the risk factors were ranked by their level of importance for both samples.The results show that although there are various similarities between both samples’risk perceptions, the ranking of the priority risks is substantially different. Chinese investors perceive political country risks, such as conflicts, government stability and bureaucracy quality, and religious and ethnic tensions as very important. The Dutch investors find the project risks; corporate governance, financial project risks and environmental and social risks most important. Similarities between both samples risk perceptions can be found in the average importance of corruption risk, the high importance of environmental and social risk, and the little importance of a country’s economic and financial risk. This study suggests that based on the similarities in risk perceptions, common grounds can be found for cooperation in the African market.

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The Research on the Dynamic Effect of Foreign Direct Investment on Carbon Dioxide Emissions

On 21/09/2013, in Finance, by rain

With the rapid flow of international capital in the world, the foreign directinvestment flows into our country in an increasing rate and it makes the strength ofeconomy in our country stronger. However, the foreign direct investment also to someextent brings some environmental problems on carbon dioxide emissions in a certaindegree. Relevant data show that China is the country which has the most carbondioxide emissions in the world. Therefore in order to meet the urgent needs, thetheory and empirical analysis of this problem is a task which brooks no delay.The theory which is the effect of foreign direct investment on carbon dioxideemissions is divided into two conduction mechanism of positive and negative effect.The conduction mechanism of the positive effect of foreign direct investment oncarbon dioxide emissions is following: with the increasing amount of foreign directinvestment, the change of the mode of foreign direct investment, the change of thenational income, clean technology diffusion and the adjustment of trade structure willeffectively promote the formation of low carbon environment. The conductionmechanism of the negative effect of foreign direct investment on carbon dioxideemissions is following: with the increasing amount of foreign direct investment, thechanges of production scale, regional structure distribution as well as thecontroversial technology diffusion will lead to the deterioration of low carbonenvironment.This paper analyses the effect of foreign direct investment on carbon dioxideemissions using the dynamic panel data which is from2000to2010in30provinces ofChina and two-step system method. Empirical analysis includes the national model,the regional and the trade model. Through a series of empirical analysis theconclusions are as follows: to the hole country, effect of foreign direct investment oncarbon dioxide emissions is positive; regional differences of carbon emissions inChina are very evident, and the eastern region is dynamic maximum and the central isdynamic minimum; to the trade model, in the manufacturing industry effect of foreigndirect investment on carbon dioxide emissions is negative. But in electronicinformation and construction industry effect of foreign direct investment on carbondioxide emissions is positive. Empirical analysis is combined with the theoreticalanalysis, and the industry influence mechanism is further elaborated. According to the above analysis, finally put forward the following policysuggestions: firstly, improve the industrial structure of foreign direct investment;secondly, strengthen the low carbon environmental protection policies andinstitutional orientation; thirdly, perfect and improve the low carbon environmentalprotection laws and regulations; finally, encourage domestic enterprises to learnforeign clean technology.

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The Empirical Study about the Foreign Direct Investment and the Economic Development in Hainan

On 21/09/2013, in Finance, by rain

The impact of foreign direct investment in the economic development of Hainan is studied in this paper. In the circumstances of economic globalization, foreign direct investment has already become one of the driving forces of a country or region’s economic development. After the reform and opening up, Hainan’s foreign direct investment and local economy have been rapidly developed. Firstly,the basic theory of use foreign direct investment at home and abroad are reviewed, then defines relevant concepts and summarizes empirical analysis of foreign direct investment.On this basis, through establishing econometric model and using cointegration analysis and Granger causality test to test time series of economic variables, this paper focuses on the impact of foreign direct investment in Hainan on the economic growth, import and export trade, labor employment, industrial structure and formation of local capital. The test results indicate:Cointegration relationship exists between foreign direct investment and GDP growth in Hainan. Each additional one percentage of FDI increased, GDP will increase by0.45percentages. In the short term, there isn’t any casual relationship between GDP and FDI, but in the long run, GDP and FDI has unidirectional Granger causality which shows that GDP is Granger cause of FDI while FDI is not Granger cause of GDP.Cointegration relationship exists between FDI and Hainan imports and exports. Each additional one percentage of FDI increased, IMPORT will increase by0.59percentages, EXPORT0.49percentages. In the short term, one-way causal relationship exists between FDI and IMPORT which means FDI is the Granger cause of IMPORT increase. But in the long term, there is no causal relationship between IMPORT and FDI. One-way causal relationship also exists between EXPORT and FDI which means EXPORT increase is the Granger cause of FDI inflows increase. FDI is not the Granger cause of EXPORT.Cointegration relationship exists between FDI and Hainan province labor employment. Each additional one percentage of FDI increased will lead to0.066percentage increase of employment. FDI is the Granger cause of L, but L is not the Granger cause of LNFDI. Only one-way causal relationship exists between them.Hainan FDI increase has contributed to the growth of the three major industries. Each additional one percentage of foreign direct investment increased, the first industry will increase by0.5percent, the secondary industry0.54percent and the tertiary industry0.63percent.There is a significant positive relationship between Hainan total fixed asset investment and the current residents’ savings. Each RMB1of current household savings increased, the capital stock will increase by about RMB0.596. But Hainan foreign direct investment exerts no significant influence on domestic capital formation. Each RMB1of community savings increased, the domestic capital that affected by FDI will increase by about RMB0.422. Flow of FDI has no significant impact on the domestic capital that affected by FDI in Hainan Province. In short, foreign direct investment in Hainan does not reflect the “squeeze into” or “crowding out” effect.Through empirical test, we can concluded that in Hainan Province small amount of foreign direct investment and lower level and quality lead to the limited impact on the economic development of Hainan. At the same time, foreign direct investment exerts different influences on Hainan GDP, imports, exports, employment, three industries and the total fixed asset investment, among which the three industries especially tertiary industry is most influenced, import and export volume especially import next, then GDP and employment. In addition, FDI has no effect on the total fixed asset investment.Finally, according to research findings, this paper puts forward some policy recommendations on how to absorb and utilize foreign direct investment. To speed up local economic development, Hainan must take the following measures:optimizing the investment environment, attracting more foreign direct investment, innovating system, deepening the system reform, providing support for the policies and regulations, expanding sources of foreign direct investment, implementing diversified investment strategy, broadening channels of foreign capital, innovating investment way, optimizing the industrial structure, expanding investment area, guiding foreign direct investment in various counties and reasonable layout.

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The Research on FDI’s Impact of Hefei City

On 19/09/2013, in Finance, by rain

In today’s society, along with economic globalization, the economic between countries are more closely,people pay more attention to foreign direct investment which is the engine of economic growth, however, scholars study areas are mainly concentrated in large national or provincial level and the research from the perspective of the capital city or prefecture-level cities is minimal, therefore, this research paper will analyze concentrated in capital cities.Hefei which is the capital of Anhui Province, in August2011, the State Council give more administrative area. Now it has policy advantages, locational advantages and funding advantages, Hefei not only the fastest growing cities in Anhui Province, but also attracts the most FDI. The goal is to build forward for the modernization of emerging central city of Yangtze River Delta region following the Shanghai-Nanjing-Hangzhou and have a greater influence on the regional mega-cities in China. Along with the the Hefei growing economic, foreign direct investment is becoming increasingly clear that pulling effect on the economy. In this context, the study of FDI and economic development in Hefei, the existence of a causal relationship, the analysis of FDI has a significant role in promoting economic growth of Hefei explore between FDI inflows and import and export trade relationship will Hefei to introduce the formulation of foreign policy and foreign trade policy has played a good theoretical support.Based on the above background and purpose, firstly, explain the status of foreign direct investment in Hefei, and from the perspective of22cities in the Yangtze River Delta, through the comprehensive analysis of FDI performance index and potential index,we noticed Hefei between22cities in the Yangtze River Delta is still”unrealized potential city “.In order to attract more foreign investment, the article further analysis of the advantages in the region attract investment in Hefei, the industrial base, the investment area and investment-oriented.On the basis of the above analysis, through the establishment of the relevant econometric model, then use co-integration test and Granger causality test on the relationship between Hefei Foreign direct investment and regional GDP and import and export,from the empirical analysis results can be seen foreign direct investment make strong pulling power, you can pull the GDP increased by0.78%when the the Hefei use of foreign direct investment for every1%increase in GDP in Hefei; however, import and export the increase on Hefei use of foreign direct investment growth has a strong stimulating effect can make foreign direct investment, when Hefei import and export for each additional1%, FDI can increase of1.3%.Based on the above, in order to improve the size and quality of foreign direct investment, also to play better role of FDI on long-term economic growth in Hefei, the article on the one hand from the strategic level, pro-active in attracting foreign investment should be preferred to introduceand increase the intensity of digestion and absorption, in order to promote their own innovation to optimize the investment structure; the other hand, from the tactical level, continue to facilitate technology transfer from Hefei immediate reality, and increase services and strategic emerging industries to attract foreign capital and strengthen the construction of soft environment, in order to increase Hefei’s foreign investment.

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Risk Analysis of Chinese Enterprises’Foreign Direct Investment

On 19/09/2013, in Management, by rain

Since the implementation of the strategy of China’s Reform and Opening-up to the outside world, the economy has been sustained the rapid development in the past thirty years. China has made outstanding achievements. Particularly China accessed to the World Trade Organization (WTO) before eleven years. The socialist market economy of Chinese characteristic integrates into the economic globalization of the world. China has repositioned in the global economy and trade pattern, realized the role from the global “Made in China” to ” China Global Manufacturing” and changed the role from “Output Foods” to “Output Capital”. Foreign direct investment plays a very important role in them. With the scale of Chinese enterprise about foreign direct investment, Chinese enterprise is faced with Investment Risk increased significantly. Therefore, a correct understanding of China’s Foreign Direct Investment Risk, effectively prevented the Investment Risk, is the decision-making core problem of our country enterprise about foreign direct investment.Based on the introduction of foreign direct investment and its risk on the basis of the theory, the paper elaborates the situation of our country enterprise about foreign direct investment and focuses on the analysis of foreign direct investment faced a variety of risks, and their sources. The text combines with the actual business according to extension theory, selects the index of the risk of enterprise about foreign direct investment, and tries to build the extension early warning model of foreign direct investment. It uses the relevant data to inspect the extension early warning model of the study. There can warn the possible risk of county. The paper puts forward the corresponding measures in order to guard against the risk of overseas investment. The writer expects to be able to provide the reference and support for investor decision-making.The innovation of this paper lies in the extension field correlation model, which is applied to the enterprise foreign direct investment risk early-warning model, enriched the risk early-warning method of analysis. There be highly operability and flexibility to the practical application. Because this is a bold attempt, there are inevitably some deficiencies, which need further research and improvement.

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A Study on China’s Resource-obtaining Foreign Direct Investment

On 19/09/2013, in Finance, by rain

Enough and stable supply of resources can ensure national economic operating safely and developing sustainable. As the first energy consumption country in the world, the gap of China’s resources supply and demand is bigger and bigger with the rapid development of industrialization and urbanization, especially the petroleum resources. It is a realistic choice both for our country and enterprise to get scarce resources by developing foreign direct investment.This article explores the problem of our country’s resource-obtaining foreign direct investment with the specific research object of China’s petroleum enterprises’overseas investment. It is based on the classic foreign direct investment theory and multinational company integration, combing and analyzing domestic scholar’related research and using variety of research methods including combining theory and empirical research, comparative analysis, etc.It is nearly20years for China’s petroleum enterprises developing their foreign direct investment from1993, and it approximately can be divided into2stages as below: the starting stage from1993to2001, and sustainable developing stage from2001to now. There are3distinguished features of China’s petroleum enterprises’ FDI. Most are state-owed enterprise, the main investment way is merger, the investment zone is wide but concentrated relatively and forming five strategic investment zones. We can learn from the yearly increasing of overseas equity production and remaining recoverable reserves that China’s petroleum enterprise’s FDI is effective. At the same time, overseas equity production share of the imports of crude oil production is increasing year by year, and it shows that foreign investment is effective for making up the gap of petroleum supply and demand, and ensuring the petroleum safety.There are still many challenges for China’s petroleum enterprises developing foreign direct investment. First of all, the following factors just as macro investment environment challenge are slowing the developing step of enterprise’s foreign investment including the fierce competition at home and abroad, foreign investment costs soaring and China threat theory. Secondly, there are also some restricted factors from the enterprise itself including narrow financing channel, lacking of investment experience and international operation managers, rigid management system, insufficient scientific research innovation, and so on. Finally, the government support security system is not sound.Throughout the history of foreign direct investment which is aiming at getting resources, some effective practices in common have been taking by the countries when developing their foreign direct investment, such as developing “the resources diplomacy”, pushing resources-obtaining type of foreign direct investment with economic aid, providing a powerful policies support including law, finance, insurance and so on, developing strategic cooperation and alliance positively, encouraging to expand investment zone to spread risk, etc.Learn from the international investment experiences, and base on anglicizing and summarizing the main problems which are faced by overseas investment presently, our country’s oil enterprise should have a clear investment strategy, improve itself in every field and enhance the competitiveness of enterprises. Meanwhile, our government should provide the related policy to support its development.

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The Study of China Foreign Investment Enterprise Competition Strategy

On 19/09/2013, in International, by rain

With the implementation of China’s reform and opening-up policy, China’s economy gradually entereda boom period from economic recovery in the early postwar period. Especially into the1990s, economicgrowth in China has made remarkable achievements. China’s vast market and high-speed and steadyeconomic development situation attract foreign investments. With the large amount of FDI inflows, andaccompanied by the impact of FDI in foreign corporate culture, on the one hand,the Chinese enterprisesabsorbed a large number of FDI to solve the problem of insufficient funds of their own enterprises, on theother hand,impacted by of foreign advanced business culture. By the means of learning the advancedbusiness management and marketing experience, and combining with China’s domestic situation, therehave been a large number of successful private enterprises such as Haier, Huawei and so on. Looking at theworld economic circle, only one of the few countries in the ranks of developed countries, especially thepull, Africa, and Asia, there are a large number of developing countries, they are also seeking the country’seconomic progress, the lack of its own strength to attract FDI become a popular choice of these developingcountries. Therefore, with adequate capital reserves, the face of wide range of needs of the world FDI,Chinese companies have embarked on a “going out” the road.Chinese enterprises to invest from the start of the1990s, went to the growing size of the case, hasmade certain achievements. Foreign investment In the beginning of analysis of the status quo of Chineseenterprises overseas investment, the further integration of international foreign investment theory of themotives of the Chinese enterprises to invest overseas to make for the analysis, the need for foreigninvestment in China. The article focuses on the SWOT analysis of China’s foreign-invested enterprises to draw its strengths and weaknesses, and proposed countermeasures, correctly Chinese enterprises to investoverseas strategic play a guidance role.

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Research on the Distribution and Its Influence Factors of Chinese Enterprises in Africa

On 15/09/2013, in Finance, by rain

The Go Abroad strategy was introduced in2000. In the same year, the first Forum on China Africa Cooperation was hold in Beijing. Since then there is a great increase of Chinese enterprises that invest in Africa. The stock of Chinese FDI in Africa was about4462million USD in2007, while the number reached13042million USD in2010, increasing43%per year. Similarly, there were only37Chinese enterprises that directly invested in Africa. After7years, this number raised sharply to1445. It means that Africa has been an important destination of the Chinese enterprises that go abroad. Meanwhile Africa is one of the continents that Chinese enterprises are widely distribution. The statistics of2010shows that Chinese enterprises directly investment can be found in50African countries. There are two key questions need to answer: What the distribution of Chinese enterprises in Africa is like? What are the influence factors of location distribution? It is wealth doing a research on above questions so that give the enterprises some information to increase the efficiency and lower the risks of FDI in Africa.With the data from the Commerce Department, Chinese enterprises that directly invest in Africa are divided into natural resource enterprises, construction enterprises and others from the view of the investment field, while central SOEs (state own enterprises), general SOEs and private enterprises by the right of control. And then the location distributions of all kinds of enterprises are shown. Based on the analysis before, natural resource, market size, infrastructure conditions, relationship between host country and China are chosen as the influence factors of enterprises’location distribution in Africa, the influence of political risk of host country is also been test. The-result shows that natural resource and market size have a great influence on enterprises’location distribution, while the influence of infrastructure is limited. The influence of political risk of host country is not significant.

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Chinese Enterprises Direct Investment Analysis in Thailand

On 15/09/2013, in Management, by rain

The strong bond of China and Thailand was built on the cooperation in trading and economics and soon the bonds between the two countries would be even more enhanced due to the inclination of Chinese enterprises to be increasing their investment in Thailand. This is due to the initiation of “Chinese Go-Out Strategy” by China where the foreign direct investment of Chinese enterprises was shown to have grown progressively as the result. Thus, the thesis studies The Chinese enterprises direct investment in Thailand.The thesis begins with the analysis of the foreign direct investment theory and the investment environment of Chinese enterprise in Thailand as well as its state of investment, its problems and possible suggestions and opinions on the subject.Thailand has a good business environment for the investment by Chinese enterprises due to geographical advantage and available natural resources, large domestic market within the country, a market potential that could extend the trade to the neighbor countries, well facilitated public utilities, efficient policies and investors’ privileges, strong diplomatic relationship; and also the cultural and traditional similarities between China and Thailand.From those advantages, Chinese enterprises tend to mainly come to invest in Thailand for two reasons:the resources and the market. However, investors who want to invest in Thailand may have to concern also about the political problems in Thailand e.g. south Thailand insurgency, the capital and laborer’s demand and supply, the high capital of logistics and corruption problem.The investment state of Chinese enterprises in Thailand suggests that the projects and the capital accumulation of Chinese enterprises are currently not as profitable as compared to other countries even though several years ago, Chinese enterprises’investments in Thailand seem to be increasing. In2010China was in the top five of the countries invested in Thailand although it was a tiny project and the capital is not higher than fifty million baht.The problem of Chinese enterprises’investment in Thailand is because most of them are small-sized enterprises which are inexperience in the investment in Thailand, also they tends to have problematic service and management, and unpopular brand names unknown to most customers. These are the problems that need to be resolved in order to increase the effective of investing in Thailand by Chinese enterprises thus the thesis would also give possible solutions in order to make a progress in the cooperation and the developing between the two countries in the future.

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The Analysis on the Impact of Technology Spillover of Foreign Direct Investment Over Technology Innovation

On 15/09/2013, in Finance, by rain

The introduction of foreign direct investment not only solves the problem of insufficient funds, but also brings the advanced technology and management experience. More importantly, the FDI has brought the positive technology spillover to the host country, such as the demonstration imitation effect, competition, human capital effect and connection effect, which is great benefit to the host companies.With the national development of northwest China policy, Shaanxi, as a strong western province, has been given more and more international and domestic attention. In recent years, more and more foreign choices invested in Shaanxi. However, under the existing technology level, the introduction of FDI will play a positive technology spillover or negative technology spillover, will cause dependence of high technology or benefit to the enterprise of the technology innovation, which needs to make a deeper analysis.Based on the above perspective, combined with the actual situation of shaanxi province, this paper try to find out whether the FDI have positive technology spillover or not through the empirical research. Then analysis FDI technology spillover effects on technology innovation, and provide the basis to promote technology innovation of the host enterprises and economic development of shaanxi province.About whether the FDI have positive technology spillover or not, this paper introduction the new variables, set up a new model, which based on the Douglas production function. The analysis showed that the FID of shaanxi province has the positive technology spillover. About the FDI technology spillover effects on technology innovation, this paper set up the VAR model which based on the FDI technology spillover mechanism. Then make the related test on this model. The analysis showed that the development effect and connection effect can promote technology innovation.Finally, according to the results of actual situation of shaanxi province analysis and empirical research, this paper put forward the corresponding proposal for shaanxi province on how to use FDI technology spillover to promote technology innovation.