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– Nelson Mandela

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Foreign Direct Investment in China

Foreign Direct Investment in China

Q Read Country Focus: "Foreign Direct Investment in China", pg. 227 in Global Business Today. Answer the following questions: 1. Consider the challenges involved with investing in China. How does China’s political position and economic situation affect its ability to attract foreign direct investment? 2. Discuss China’s efforts to encourage investment in its underdeveloped areas. What effect will investment have on these areas? How can firms prepare for the unique challenges of operating in these areas?

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1. The market potential appears to be high in case of considering China as a country of investment. However, the demand in case of investing in China will always be anticipated and not actual. Therefore, the translation of anticipated demand (for investing in China) to actual demand cannot always be guaranteed. The transportation system of China is also not developed in an organized or efficient manner. This implies that there will always be problems related to distribution of products in China. In urban areas there might be better transportation systems in comparison with the transportation systems beyond the boundaries of urban areas.