2 assignments (2000 and 1500 words each)

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Economics

Description

First assignment

Essay is intended to test your ability to critically analyse arguments and issues in Chinese Business. Looking for evidence of wide reading and an ability to present a cogent, reasoned argument. A concise essay directly answering the question will score higher marks than a lengthly one containing large number of irrelevancies.

- referenced using chicago system

- 2000 words excluding footnotes, graphs, tables and bilbography

- 12 to 15 references

Topic 2: “in 2016, china’s OFDI surpassed inward FDI for the first time in recent history, reflecting a new role for china as a global investor”

Second assignment

The essay is to be based on a topical employment relations issue in Singapore. The essay should be informed by current and reflective commentary on the issue chosen and must be referenced to a variety of texts, articles and news media. The maximum length is 1500 words. There is no required format, but there must be an introduction, body and conclusion with logically developed arguments. The essay must be printed double spaced on single sided A4 pages. Use of headings is encouraged. Referencing should be APA style.

The essay should use examples from Singapore where appropriate.

2. What are the main responsibilities of unions in Singapore and are they carrying out these responsibilities? Illustrate your answer by including answers to the following:

a. Has the role of unions changed as the economy has developed?

b. Are unions experiencing the same loss of membership as in other developed countries?

User generated content is uploaded by users for the purposes of learning and should be used following Studypool's honor code & terms of service.

Explanation & Answer

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CHINA’S OFDI: A NEW ROLE FOR CHINA AS A GLOBAL INVESTOR

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Date:

2

Introduction
Outward Foreign Direct Investment (OFDI) in China has been growing dramatically from
1979 to the recent past with the country now being ranked top in the world both in terms of the
OFDI flow and the stock flow. Most of the increase in OFDI has been experienced since the year
2000 when the ‘Go Global' strategy started being implemented by the country to ensure that the
country becomes one of the largest global investors in the world. One of the main characteristics
of the country's OFDI is the fact that they are state-owned enterprises which is much larger than
the investments from the private sector. This is shown by the fact that the top ten largest
multinationals from China are state-owned enterprises with most of them investing in the natural
resources sector in various parts of the world. In terms of industrial ranking for OFDI investment
the top three industries that the country has invested in includes service sector, primary sector
and the manufacturing sector. 1
Al-Sadig hence argues that OFDI refers that is applied by countries where business
enterprises from these countries expand their operations to foreign countries where they may
achieve this through strategies such as greenfield investments, mergers and acquisitions of
foreign companies and expansion of existing foreign facilities and firms. One of the main
motivations for OFDI is when the local markets become saturated and hence the survival of the
enterprises relies on venturing into new markets to ensure continued growth in revenues and the
future survival of the enterprise. 2

1

Anil, L, Carik, C, Canel, C and Porterfield, R, “A Comparison of Inward and Outward Foreign Direct Investment Determinants in

Turkey,” International Journal of Business and Social Science 2, no. 20 (2011): 141-155.
2

Al-Sadig, A.J, Outward Foreign Direct Investment and Domestic Investment: The Case of Developing Countries (Washington: International
Monetary Funds, 2013), 1-28.

3
Foreign Direct Investment (FDI) refers to investments that are made by a business
organization or individuals in a foreign country with the aim of meeting the business interests of
the parent country. OECD Investment argues that this is achieved through various ways
including the establishment of business operations in foreign countries, acquisition of assets in
foreign countries and ownership of interests in foreign countries. With FDI companies and
individuals usually look at establishing an effective control over or substantial influence
over the decision making the process of the foreign business in which they have invested
in. This hence means that Inward FDI in China means situations where firms from other
foreign countries invest into the country either to take advantage of the conducive
operating environment such as cheap labour and raw materials or as a strategy to increase
their market reach which is provided by the country’s large population. 3

Figure 1: Stock of Outward Foreign Direct Investment (OFDI) from Four Emerging Countries (World Resource Center)4

3

4

OECD Investment, China’s Outward Foreign Direct Investment (Paris: OECD Directorate for Finance and Enterprise Affairs, 2008), 1-8.

World Resource Center, Stock of Outward Foreign Direct Investment (OFDI) from Four Emerging Economies and Combined OFDI Flows,
Accessed February 9, 2018 (2012), http://www.wri.org/resources/charts-graphs/stock-outward-foreign-direct-investment-ofdi-four-emergingeconomies-and.

4
Over the years, China’s investments in various parts of the world, and especially in
developing countries such as African countries has continued to grow tremendously with the
country now ranked among the largest investors in the world. Carike, Elsabe and Henri argue
that for the various developing countries in the world, China is now the largest source of FDI
with the country investing in more than 48 countries in Africa. This is usually motivated by two
factors, the fact that African countries are reaching in natural resources which are raw materials
in various industrial operations and the fact that the high African population is a big source of
market for Chinese companies. This is especially the case for companies in the manufacturing
and construction industries. 5
New Role of China as a Global Business Investor
In the recent years, China's OFDI in the developing countries has been growing at a
tremendous rate than in the developed economies. In countries such as African countries,
research has shown that the country has already invested in more than 48 countries over the years
with the main focus being the exploration of natural resources which act as raw materials in the
construction industries and access the largely untapped market which is provided by the high
population of the African countries. In 2016, the country rose to become the second-largest
source of FDI in the world with the outwards FDI growing by more 44% year on year to reach
$183B. Dongmiao argues that one of the main motivations for this growth was a large number of
mergers and acquisitions by Chinese firms in various parts of the world, and especially in the

5

Carike, C, Eslabe, L and Henri, B, “Chinese Foreign Direct Investment in Africa: Making Sense of a New Economic Reality,” African Journal

of Business Management 6, no. 47 (2012): 11583-11597.

5
developing countries. This growth hence ensured that the inward Foreign Direct
Investment by other countries in China was surpassed by the outward FDI by the country
into other countries. 6

Figure 2: China's OFDI since 1982 (OECD Investment)7

Wang and Yu argue that there are various factors that have motivated China to
increase their outwards foreign direct investments into the various parts of the world. For
countries that China's investments are high, there is a high abundance of natural resources
which the country's enterprises look at exploring with an aim of getting raw materials and
expansion of infrastructural development as part of revenue sources for these countries.
Another motivation that has been identified is that such countries available institutional
quality which either helps in ensuring that foreign companies can effectively come and
establish operations in such countries without facing a hostile business environment that
would hamper their operations or affect the operations of the companies in such an
6

Dongmiao, Z, China Becomes World’s Second-Largest Source of Outwards FDI: Report, Accessed February 9, 2018 (2017),
http://www.xinhuanet.com/english/2017-06/08/c_136350164.html
7

OECD Investment, 1.

6
environment. Some of the key natural resources which have acted as a motivation for China to
invest in various countries include oil and metal. 8
Given that most developing countries are still adopting technology and have poor
quality institutions, this is one area that the country used as a motivation to push their
investments in such countries. For resource abundant countries whose quality of institutions is
low, research has shown a large investment over the years from China into such countries. For
countries with poor technology implementation, the country has used this as an opportunity to
push higher technology adoption by investing in such countries in the technology industry. This
hence means that the country uses this as an opportunity to venture into new markets where they
can sell their technology hence expanding the markets of technology companies from China.
This is also evidence that there are chances that China may be taking advantage of the
technology gap between the country and the various developing countries especially in Africa to
increase their Outward FDI. 9
One of the main factors that have affected China's OFDI is the legal and regulatory
framework created by the country with regards to OFDI. The created legal and regulatory
framework created by the country has been aimed at promoting the global strategy of the country
hence ensuring that Chinese firms are able to compete at a global level. This also ensures that
there is better access to resources, be it natural resources, strategic resources or any other
resources that ensure successful business operations and access to the market. This eventually

8

Wang, P and Yu, Z, “China’s Outward Foreign Direct Investment: The Role of Natural Resources and Technology,” Economic and Political

Studies 2, no. 2 (2014): 89-120.
9

Sauvant, K.P and Chen V.Z, “China’s Regulatory Framework for Outward Foreign Direct Investment,” China Economics Journal 7, no. 1

(2015): 141-163.

7
ensures that there is increased the corporate competitiveness of Chinese firms in the
global market which is one objective that the Chinese government has been looking at
achieving. 10
Most of the Chinese companies have been facing increased competition both from local
companies operating in the same space and from the various international companies which are
established into the country to take advantage of the various business environmental factors that
are more conducive as compared to their parent countries. Such factors according to
Wang includes the large population which means that there is an availability of ready
market and cheap labour and the abundance of natural resources which helps impr...


Anonymous
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