Attitudes of Foreign Firms Toward Foreign Direct Investment in China
Abstract
Foreign direct investment (FDI) has played a key role in China’s rapid economic growth, but there remain many challenges facing further FDI development. In this regard, this study examines the attitudes of foreign companies toward FDI in China to determine how foreign firms perceive the value of investment in China. According to the results, the respondents generally had favorable attitudes toward foreign investment in China. The mean for the respondents with prior experience investing in China was higher than that for those without no such experience, and there was a significant difference between respondents’ attitudes in terms of their prior experience. The respondents emphasized attractive business environments as the most important motivator for investing in China, followed by able workers, easier investment processes, and special incentives, in that order. The respondents with prior investment experience were most likely to report attractive business environments and able workers, whereas those with no prior investment experience were most likely to report attractive business environments. However, there was no significant relationship between prior investment experience and motivators. The respondents emphasized less competitive wages as the most important risk in investing in China, followed by a lack of China expertise/experience, less favorable regulatory environments, and more difficult worker control, in that order. The respondents with prior investment experience were most likely to report less competitive wages, whereas those respondents with no prior investment experience were most likely to report less competitive wages and a lack of China expertise/experience. There was no significant relationship between prior investment experience and risk factors. The results have important implications for policymakers and business managers in China.
Keywords: Foreign Direct Investment, Prior Investment Experience, China, Motivator, Risk
M. Sun