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?
First, let us start with understanding the foreign direct investment, FDI. This occurs when firms or companies around the world decide to invest in a program or marketing for different products in another foreign country (Hill, & Hult, 2016). China has been moving past other countries and has worked its way to be a leader in FDI. By focusing on the underdeveloped areas, China can increase business in these areas and bring better economic growth to those areas. Dumont (2018) explained that in order to attract more investors, China has to be more competitive in resource availability and its infrastructure. This is something that is considered a challenge because while China has major growth and has developed quite quickly in recent years, that can slow down immensely or have adverse reactions in the upcoming years. There are also costs to consider within the country. Dumont (2018) explained that with its success in the last few years, costs have also risen and there are excessive regulations that cause investors or companies to spend more money on complying with regulations rather than spending on something profitable for the company. These regulations can actually hinder investment in the country. Stability is another thing to be concerned about in the country. By investing in underdeveloped areas, it can bring more potential, more money, and success, but will it show stability? It is something that a country can focus on, but with some issues that China has, it can be unpredictable.
Dumont, M. (2018, August 7). Top 6 factors that drive investment in China. Investopedia. Retrieved from https://www.investopedia.com/articles/economics/09/factors-drive-investment-in-china.asp
Hill, C. W. L., & Hult, G. T. M. (2016). Global business today (9e ed.). New York, NY: McGraw-Hill Education.
by EssayRoyal, Dec. 10, 2019, 5:46 p.m.