Business Case Studies, Govenrment and Business Environment Case Study, Chinas FDI Outflows

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Case Title:

Chinas FDI Outflows

Publication Year : 2004

Authors: Dipta Saha & Christoph Zacharias

Industry: General Business

Region:China

Case Code: GBE0008

Teaching Note: Not Available

Structured Assignment: Not Available

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Abstract:
Inherent weaknesses in the pay-as-you-go system and political expediencies, which contributed to the problems in the pension system, necessitated pension reforms. In 1981, Chile pioneered the pension reforms. These reforms were radical and had far-reaching consequences. The countries that had never reformed their pension systems due to a myriad of problems started emulating the Chilean Pension Model. Since then this model has been attracting lots of interest all over the world With all eyes set on China's Foreign Direct Investment (FDI) inflows, the country's outflows drew little attention. Restrictions remained on FDI outflows from China. Notwithstanding these restrictions, China had encouraged outward investment since the late 1970s when reforms first began. By the mid-1990s, Chinese companies began using this outflow route seriously. China believed that to excel in foreign trade and to prosper, such foreign operations were mandatory. By 2000, China had invested in 6,298 enterprises in over 160 locations with investments running into $11.36 billion. This move represented one step towards building 'Brand China'. It also provided China with a plank for the next stage of its structural reforms which was expected to transform it into a full-fledged market economy.

Pedagogical Objectives:

  • To discuss China's efforts to emerge as a full-fledged market economy and the role of FDI outflows in achieving this objective.

Keywords : fiscal policy case study, Foreign direct investment, FDI (foreign direct investment) outflow and FDI (foreign direct investment) inflow, China, Haier, Shanghai Electric, D'Long Strategic Investments, Sinopec, Brand, New markets, Foreign technology, GDP (gross domestic product), Original equipment manufacturers (OEM), Cheap labour, World Trade Organisation (WTO)

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