FDI in China
FDI in Figures
The absorption of FDI flow is part of China's opening up to the outside world. After reaching a peak in 2008 and subsequently falling under the effects of the global economic crisis, FDI flows have recovered and the trend should continue in the future.
China is an unexploited market and a potential for considerable growth due to several reasons:
- It's the biggest internal market in the world with 1.3 billion potential customers;
- it's a rapidly growing market (minimum 8% growth per year); and
- the labor costs are low even if this situation is changing in certain areas;
- with the development of the Western provinces, China offers new opportunities, particularly in the Sichuan province.
Nevertheless, certain factors can hinder investments, such as China’s lack of transparence, legal uncertainty, low level of protection of intellectual property rights, corruption or protectionist measures which privilege local businesses.
|Foreign Direct Investment||2007||2008||2009|
|FDI Inward Flow (million USD)||83,521||108,312||95,000|
|FDI Stock (million USD)||327,087||378,083||473,083|
|Performance Index*, Ranking on 141 Economies||102||94||76|
|Potential Index**, Ranking on 141 Economies||32||30||-|
|Number of Greenfield Investments***||1,214||1,515||1,143|
|FDI Inwards (in % of GFCF****)||6.0||5.3||37.0|
|FDI Stock (in % of GDP)||9.7||8.7||10.1|
Note: * The UNCTAD Inward FDI Performance Index is Based on a Ratio of the Country's Share in Global FDI Inflows and its Share in Global GDP. ** The UNCTAD Inward FDI Potential Index is Based on 12 Economic and Structural Variables Such as GDP, Foreign Trade, FDI, Infrastructures, Energy Use, R&D, Education, Country Risk. *** Green Field Investments Are a Form of Foreign Direct Investment Where a Parent Company Starts a New Venture in a Foreign Country By Constructing New Operational Facilities From the Ground Up. **** Gross Fixed Capital Formation (GFCF) Measures the Value of Additions to Fixed Assets Purchased By Business, Government and Households Less Disposals of Fixed Assets Sold Off or Scrapped.
FDI Inflows By Countries and Industry
|Main Investing Countries||2008, in %|
|Virgin Brithish Islands||10.0|
|Main Invested Sectors||2008, in %|
|Wholesale and retail trade||4.1|
|Transport, storage, telecommunications, postal services||2.6|
|Computers and software||2.5|
Source: Invest in China
- Form of Company Preferred By Foreign Investors
- Form of Establishment Preferred By Foreign Investors
- Main Foreign Companies
- Sources of Statistics
Invest in China
Why You Should Choose to Invest in China
- Strong Points
- China has a rapidly expanding market, which was not overly affected by the 2008-2009 financial crisis. With a strong potential, a wealth of employees and potential partners eager to learn and evolve, the country is a base for low cost production.
- Weak Points
- A changing legal context, administrative complexity, the difficulty for foreigners to learn the way of conducting business, both culturally and in practice, a poor middle management level and a very high staff turnover are factors which are often crippling in market acquisition.
- Government Measures to Motivate or Restrict FDI
- In the foreign investment guide published by the State Commission for Development and Reform in November 2007, the Chinese government made it known that investments in sectors or Chinese companies that already have "a relatively strong production capacity with advanced technologies 'will not be encouraged', while investments in high technology, production of equipment and new materials, and in the services sectors, as well as in the recycling economy, clean production, use of renewable energies and environmental protection, will be welcomed as they are sectors in which China needs foreign companies.
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