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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.

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The Research of the Relationship between China-ASEAN Financial Cooperation and Bilateral Trade Development

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

The research of regional financial Cooperation has been developing in both theory and practice for along time. On the theoretical respect, Robert Mundell firstly proposed the Optimum Currency Area theory, and with the mutual effort of many other economists, it gradually becomes an important theoretical guidance for the regional financial cooperation in other parts of the world. On the practical respect, the successful effort of European financial cooperation also set a good example for others, and the dollarization trend in Latin America is a praiseworthy attempt in regional currency cooperation. Therefore, the regional financial cooperation between China and ASEAN not only has a good theoretical base but will also learn precious experience from developed countries.In this paper we first combs the relative knowledge of regional financial cooperation as well as international trade development, then we introduce the background and development of financial cooperation between China and ASEAN. Following we utilize the method of panel data analysis by STATA11.0 to establish the panel data regression model thus find out which financial factors we select significantly influence the trade volume between China and ASEAN and the conclusions are exchange volatility and foreign exchange reserve. After the empirical analysis we further explain the reason why those factors become significant.Based on the results of the empirical analysis, we also refer to the experience from developed countries and discuss the policies that may promote the development of bilateral trade volume between China and ASEAN by use of those financial factors effectively. In this paper we hold that because of the differences exist in China and ASEAN, in the coming future it is impossible to establish an optimum currency area similar to European Union in this region. So we must make practical advise for the regional financial cooperation in accordance with the present economic situation between China and ASEAN.

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The Analysis of the Impact of FDI’s Regional Distribution Difference on Industrial Structure

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

With the liberalization of world economy and the acceleration of global economic integration, foreign direct investment (FDI) in China’s economy is playing an increasingly important role. FDI to China has brought capital, technology, management skills and business ideas and other resources, promoted the optimization and upgrading of China’s industrial structure directly and indirectly. However, foreign investment in China is quite different in the distribution of various regions, and each region of the optimization and upgrading of industrial structure are not the same. This paper combines quantitative analysis and qualitative analysis to analyze this issue and take the logistics industry as the empirical analysis. Therefore we draw the conclusion as follows:the logistics industry in eastern provinces of the effect of FDI is positive, but negative effects on the central and western. In addition, the situation of the central is better than the west. Based on quantitative analysis, the paper propose ways of making use of foreign capital for China’s logistics industry, structural optimization and industrial growth.

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Qualitative and Quantitative Analysis of Political Risks Faced by China’s FDI in Africa

On 15/09/2013, in Economics papers, by rain

Since twenty-first century, China has integrated into the global economy gradually after entering to the World Trade Organization. With the development of marketing economy, Chinese companies started to invest overseas to exploit international market, meanwhile the “Going Abroad” strategy and many preferential policies were proposed by government to help and facilitate Chinese enterprises’ overseas investment. Therefore, encouraged by these policies, China’s outward investment has grown rapidly and significantly.With rich natural resources and sustainable economic growth, Africa has attracted great amount of foreign investment, which also includes the investment from China. Now, there are more than2000Chinese enterprises locating in45African countries or area, and it has become a popular choice to do business in the Africa Continent. However, the problem is that political risk, which is the most dangerous risk in Africa for foreign business, has not been realized or serious valued by Chinese investors and government, though it has damaged the interests of Chinese investment.In order to have a deep study on the political risk faced by Chinese investment, every type of political risks is discussed and analysed in the qualitative sector of my paper such as war and civil rebellion, new political violence, creeping expropriation, default risk and so on. These risks has seriously influenced the economic interests and the safety of Chinese people in Africa. In the quantitative sector of this paper, a fixed effect model is built to check whether political risk is an important factor for Chinese investors which may effect their decision to invest in Africa. Other variables like market, human resources, energy also have been considered in the model. However, the result presents that political risk is not a main factor to China’s investment in Africa. It means investors do not care about this risk seriously, which is extremely dangerous problem for both investors and government. With a view to solve this problem, suggestions are provided to both government and Chinese companies in the last section of this paper.

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The Study of the FDI that Influences to the Industrial Structure of Henan Province

On 14/09/2013, in Finance, by rain

Along with the continuous deepening of reform and opening up andeconomic process of globalization accelerates, China is graduallyintegrating into the world economic system, foreign direct investment hasbecome an integral part of China’s economic. Henan Province as a centralprovince, the scale of the absorption and utilization of foreign directinvestment continues to expand, the level is also rising. Foreign directinvestment makes a contribution to Henan’s economic capital, technologyand management experience, to promote employment, an increase offiscal revenue. However, foreign direct investment has also brought somenegative impact on the changes in industrial structure of Henan. China isfaced with the task of optimizing and upgrading the industrial structure.As to Henan, how effective to use the foreign direct investment topromote the optimization and upgrading of industrial structure is animportant goal of economic reform and economic development. Thefocus of this study is the impact of foreign direct investment in thechange of Henan Province’s industrial structure. This paper’s researchingideas are this: First, it is to analyze the use of foreign direct investmentand the industrial structure of Henan, as well as the distribution of foreigndirect investment in the industry. Second, it is to empirically analyze theimpact of foreign direct investment in the structure of Henan’s industrialstructure. Finally, it is suggesting how effective use the foreign direct investment to promote the optimization of industrial structure of HenanProvince.According to the reaching ideas, this paper systematically introducesthe literature and theoretical studies of domestic and foreign scholars onthe relations of foreign direct investment and the structure of industry.Second, it is detailed analyzed the characteristics of the industrialstructure of Henan Province and foreign direct investment’s distributionin the three industries. Then, it is to measure the deviation value ofindustrial structure adjustment caused by foreign direct investment.Finally, according to the conclusions, it is suggesting how effectivelymake use of foreign direct investment to optimize the industrial structureof Henan.

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A Study on the Location Slection of Banking Industry Foreign Direct Investment

On 13/09/2013, in Finance, by rain

With the strengthening of global economic integration trend, our national banking starts to go global and actively expand foreign direct investment. In the process of the foreign direct investment, the correct location selection is a crucial aspect for the banking acquiring production factors and maximum benefits. Since the1970s, the western economists such as Hymer smith, Vernon and Dunning have had further research for the enterprise’s international direct investment and formed different theoretical system. The traditional foreign direct investment theory more or less, directly or indirectly related to the aspect of the location selection. However, the system research of foreign direct investment location selection, especially the banking foreign direct investment location selection has not been concerned.We selected Chinese banking as the research object, combined theoretical analysis and case analysis method, studied the location selection of the national enterprise’s foreign direct investment. Based on the OIL paradigm of Dunning’s theory, taking quantity of China branches in the international market as the independent variable and impact factors influencing the Chinese foreign direct investment as the dependent variable, we set up the multiple regression model based on panel data. Comprehensive analysis the main factors which influence foreign investment location choices of commercial Banks in China, we can get that the first factor is bilateral trade volume and psychological distance between the host country and China, fully demonstrated “follow their customers” is our primary reason of banking on FDI location choice.Finally, combined with foreign direct investment location choice practice of ICBC, this study summarizes location choice features of our banking industry’s foreign direct investment at the present stage: first, location choice excessively gathers and internationalization is still in the early stage. Second, adjust measures to local conditions, carry on diversified development strategy. Three, use various agencies investment. Then, based on this, we put forward relevant suggestions of foreign direct investment location choice in service industry: first, rely on Hong Kong、Macao and the Asia-pacific region, unfold the global strategic layout; Second, deepening layout in Euramerica and other developed area; third, promote emerging market, such as Africa.

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Research on China’s Direct Investment in Lao PDR

On 13/09/2013, in International, by rain

China and Lao PDR has established a good diplomatic relationship since1961. In1989, after the normalization of the Sino-Lao relations, the two countries haveexpanded their growing cooperation in the political, economic, trade, culture, social,education, and health care among many other functional areas while sustaining onclosed coordination and cooperation in international and regional affairs. China is notonly a good neighboring country to Lao PDR, but also a good economic partnership.Both China and Lao PDR are developing third world countries with similar politicaland social systems; the political relations of both countries are stable. For over20years, China’s investment has grown successfully and widely in the country. As theinvestment with both countries strengthens day by day, Lao’s government welcomesthe implementation of new policies and laws in order to obtain huge economicachievement in order to develop socially and economically. Since Laos began todecentralize control and encourage private enterprise in1986, Laos’ economy hasgrown rapidly. Although Lao PDR remains as one of the poorest countries in southEast Asia, Lao PDR has become a rising regional player in it is role as ahydro-electric power supplier to neighboring countries such as China, Vietnam,Cambodia, Myanmar, and Thailand. As a result of direct foreign investments, Laos’economy has rapidly grown in recent years and the investment trend continues togrow.Through research on the Lao FDI and the development case study on China’sinvestment in Lao PDR, this paper will talk about Lao investment environmentattraction foreign direct investment, and also focus on the growth of China investmentin Lao PDR. This article is separated into six parts. First, I will overview thebackground of Lao PDR, which related to the topic. Second, I will focus on the theoryof the definition about FDI, theory of economic development, SWOT and PESTanalysis, and also focus on Lao Investment Law and Policy. Third, the chapter willexamine on Lao investment environment attraction to FDI. Fourth; I will analyze theon Lao investment condition to Chinese investment in Lao PDR by using both SWOTand PEST analysis to examine the external and internal in the current situation. Fifth,this chapter will focus on China-Lao cooperation on trade and investment. In addition,the chapter will analyze of the growth of China investment in Lao, which focus onsome advantage and disadvantage form the investment. In conclusion, after the detailed analysis of Chinese investments in Laos, I will do an evaluation of thefunctions to find solutions to the problem and suggestions related to the issue. Somecomments will help to improve the investment in Lao PDR, understand the reality ofChinese investments in Laos as much as possible, and improve the relationshipbetween two countries specifically the Chinese FDI sector in Laos.

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Relationship between Service Sector Inward FDI and Economic Growth

On 13/09/2013, in Trade, by rain

Traditionally, foreign direct investment (FDI) was mainly directed to themanufacturing sector. Since the1990s, a new trend in the internationalization of capital hasemerged that services sector has been one of the main destinations. FDI in service sectorhas attracted a growing attention from scholars at home and abroad,especially therelationship between service sector inward FDI and economic growth. However, theconclusions are different due to research perspectives and methods.This paper puts its hypotheses based on the original viewpoints and then tests these.The author use econometric methods, included ADF test, Johansen test, Granger test, OLSregression analysis and reach the conclusions: service sector inward FDI cause theeconomic growth, while the economic growth dose not cause service sector inward FDI;Compared to manufacturing sector inward FDI, the economic output elasticity of servicesector inward FDI is greater; Among the five mechanism, technical effect is the mostimportant, followed by capital effect, employment effect and the industrial structure effectand system effect are not notable.With the degree of openness deeper and deeper in Shandong Province, the scale andquality of service sector inward FDI, which has the fastest increase in the actual utilizationof FDI, has been improved more, which will promote economic growth significantly. Thepaper selects Shandong as case and presents the development of service sector and FDI ofit in Shandong. Then the anthor carry on an empirical analysis with the data of Shandongprovince from1984to2010and get the conclusions in accordance with the status inShandong. Finally, the author gives some suggestions to absorb and make use of servicesector inward FDI to stimulate economic growth.