What makes china an attractive location for inward direct investment Essay - 1

What makes china an attractive location for inward direct investment by multinational enterprises - Essay Example The country went ahead to announce increased merger and acquisition deals to over one hundred and thirty mergers in 2009. Outer merger and acquisitions in 2008 exceeded US $27billion. China’s strength in the international investment lies its economy’s consistency through downturns (Qu et al 2010). Foreign outflow and inflows in China have been notably stable despite persistent downturns on the global threshold. Most studies attribute development of the Chinese economy and its financial stability to foreign investments. More than fifty per cent of Chinese exports come from foreign connections are located within the country. Out of five hundred of the world’s largest companies, three hundred have extended their productivity schemes to China. These foreign firms alone employed approximately twenty four million workers within China (Green et al 2010). The data taken shows that over three quarters of Western, Japanese and other Asian multinational organizations move to China for the domestic market (Urata et al 2006) Investors are especially attracted to China by the low costs of labor and land. The Chinese labor force is among the largest in the world. It consists of over one hundred and four million in the productive sector. This number alone doubles the labor forces of Germany, US, Italy, Canada and Britain all put together. The Chinese market is also characterized by offer deficit besides the favorable costs of land and available labor. China is endowed with resources such as minerals for example, aluminum, bauxite and oil that are useful in the investment process. Its investment is influenced by money supply and recent account balances. Countries seeking to attract foreign investment use such methods as these. The methods involve creation of incentives in reduced taxation on export of goods to China, tough recommendations on technology and favorable loaning processes along with good infrastructure