Foreign Investors In China Research Articles

Success Factors of Cross-Border Agricultural Investments for Opium Poppy Alternative Project under China’s Belt and Road Initiative

Cross-border agricultural investments (CBAIs) are considered to be an essential strategy that is expected to bridge the gap between poverty reduction and rural development in marginalized regions. Agricultural investments serve as a necessary indicator of the performance of international cooperation in China’s Belt and Road Initiative. It is of great significance to summarize the success factors of Chinese investors under this initiative and, more importantly, to improve the sustainability of CBAI projects and associated rural development. Extensive opium poppy cultivation is a barrier to poverty reduction in marginalized communities in less-developed countries such as Laos and Myanmar. The CBAIs in the opium poppy alternative (OPA) project conducted by Chinese agricultural companies aim to reduce drug crop cultivation and rural poverty based on a perspective of economic development. However, little is known about how participating companies cooperate with ex-poppy farmers to achieve investment success. In this study, we adopted case interviews and questionnaire surveys from Chinese agricultural companies in the China–Myanmar–Laos border region, with the aim to explore the success factors of CBAIs in the OPA project under China’s Belt and Road Initiative. The results indicated that the success of agricultural companies involved in the OPA project depended on three key factors, including (1) institutional and employee capacity building, (2) responses to policy and market incentives, and (3) support for the participation of ex-poppy farmers and community development. Our findings contribute to the theoretical and practical understanding of capacity improvements for foreign investors in China’s Belt and Road Initiative and shed light on the support of international agricultural cooperation for rural livelihood improvement.

Foreign ownership and stock liquidity uncertainty

Using manually collected data on foreign investors in China from 33 jurisdictions between 2008 and 2018, we find evidence supporting the view that foreign investors significantly reduce stock liquidity uncertainty. The results of instrumental variable regressions corroborate this causal relationship. Foreign investors introduce good governance practices and socially responsible philosophies to Chinese listed firms, reducing stock liquidity uncertainty. However, we find that a greater cultural distance between foreign investors and investee firms undermines the marginal effect of foreign ownership on reducing stock liquidity uncertainty. Furthermore, the effect of foreign investors on reducing stock liquidity uncertainty is greater for firms with poor corporate governance. Therefore, we conclude that foreign investors play a positive role in the world’s largest emerging stock market.

Are Foreign Investors Informed? Trading Experiences of Foreign Investors in China

Are Foreign Investors Informed? Trading Experiences of Foreign Investors in China

The Law and Economics of “Forced” Technology Transfer and Its Implications for Trade and Investment Policy (and the U.S.–China Trade War)

Abstract “Forced technology transfer” is a central issue in the ongoing U.S.–China trade row. The phrase encompasses a number of different practices, but the most significant according to various commentators involve measures that require foreign investors in China to partner with domestic entities as a condition of making an investment, either by forming a joint venture or affording Chinese investors a controlling equity stake. These “corporate structure requirements” empower prospective Chinese partners to bargain for technology transfer as a condition of forming a new venture or otherwise enable them to learn the details of foreign technology through participation in the business enterprise. Foreign investors are free to reject such requirements and forego the associated investment opportunities, and in this sense any technology transfer pursuant to China’s requirements is “consensual.” For ease of reference, this essay refers to these corporate structure requirements as CSR. The analysis to follow examines the economics of CSR from both the national and global welfare perspectives. It indicates how CSR may undercut the national welfare of the USA even if it is profitable for U.S. investors. The global welfare implications of CSR, however, are much less clear, which offers an explanation for the absence of any constraints on CSR in typical trade agreements. A clear role for restrictions on CSR does emerge, however, in investment agreements that seek to eliminate investment protectionism by requiring “pre-establishment national treatment” for foreign investors. This analysis has immediate policy implications for the ongoing trade dispute with China.

Regulatory Simplifications for Foreign Investors in China (Shanghai) Pilot Free Trade Zone

The present article deals with the legal regime in Shanghai Free Trade Zone in the context of business activity taken up by foreign (Polish) entities on the territory of the People’s Republic of China. First of all, the author discusses the general problems in international exchange between Poland and the PRC as well as the chief barriers in access to the Chinese market. The following section of the article is devoted to the general legal provisions that apply to foreign businesses in the Middle Kingdom. Part three discusses preliminary issues related to Shanghai Free Trade Zone with regard to partnerships and companies established by foreign entities. The final section concerns the legislative simplifications in the Free Trade Zone as compared with the general regulations which apply to foreign (Polish) businesses in the PRC. The conclusion features an evaluation of the simplifications and their attractiveness for Polish businesses.

The Law and Economics of 'Forced' Technology Transfer (FTT) and Its Implications for Trade and Investment Policy (and the U.S.-China Trade War)

“Forced technology transfer” is a central issue in the ongoing U.S.–China trade row. The phrase encompasses a number of different practices, but the most significant according to various commentators involve measures that require foreign investors in China to partner with domestic entities as a condition of making an investment, either by forming a joint venture or affording Chinese investors a controlling equity stake. These “corporate structure requirements” empower prospective Chinese partners to bargain for technology transfer as a condition of forming a new venture or otherwise enable them to learn the details of foreign technology through participation in the business enterprise. Foreign investors are free to reject such requirements and forego the associated investment opportunities, and in this sense any technology transfer pursuant to China’s requirements is “consensual.” For ease of reference, this essay refers to these corporate structure requirements as CSR. The analysis to follow examines the economics of CSR from both the national and global welfare perspectives. It indicates how CSR may undercut the national welfare of the USA even if it is profitable for U.S. investors. The global welfare implications of CSR, however, are much less clear, which offers an explanation for the absence of any constraints on CSR in typical trade agreements. A clear role for restrictions on CSR does emerge, however, in investment agreements that seek to eliminate investment protectionism by requiring “pre-establishment national treatment” for foreign investors. This analysis has immediate policy implications for the ongoing trade dispute with China.

Оценка масштабов транснационализации бизнеса и системы поддержки внешнеэкономической деятельности в Китае

The article assesses the scale of foreign direct investment of Chinese companies in foreign markets, including Russia. It is established that the strategy of "going abroad" at the moment has impressive results, and China's investment activity will only increase, even despite the opposition from foreign countries and the presence of problems with the support of potential foreign investors in China itself. A special role in the implementation of this strategy should play a systematic support for exports, which is an important component of China's foreign economic policy

Market openness and market quality in gold markets

AbstractThis paper studies the impact of market openness on market quality in gold markets, by investigating the openness event that occurred when the Shanghai Gold Exchange (SGE) launched an international board (SGEI) for foreign investors in China. Investors prefer to trade on the SGE than the SGEI, probably due to the SGE’s higher liquidity. In addition, using the New York Mercantile Exchange (COMEX) gold futures as the benchmark, we show the SGE experiences a significant increase in liquidity without a concomitant increase in volatility. Moreover, the SGE’s contribution to international gold price discovery increases after the openness event.

Spatial Analysis of Foreign Direct Investment in Chinese Cities

The determinants of foreign investment in Chinese cities are analyzed by year from 2011 to 2014 by using regression models. As a result of the empirical analysis, fixed assets investment indicating the agglomeration of the economy was found to have a statistically significant positive effect on foreign investment in all years under study and models. The average wage variable and per capita GRDP variables have statistically significant positive effect on foreign investment in general. It can be inferred that foreign investors do not consider the competitiveness of labor costs when investing in China, but rather consider the purchasing power of cities with high wage levels and per capita GRDP. This seems to be due to the fact that foreign investors in China have shifted from a manufacturing focus to the service industry and considered market factors in their decision of investment location. As for institutional factors, the designation of special economic zones or coastal open cities and national economic and technological development areas showed a statistically significant positive effect on foreign investment, while the other dummy variables such as Pearl River Delta, Yangtze River Delta and Bohai Rim Region did not have a statistically significant effect.

Is China a single united market for foreign investors? - Federalism, Chinese style and inward FDI in China

Whilst existing research on the locational determinants of inward foreign direct investment (FDI) in China and federalism, Chinese style makes important contributions to the literature in its own right, there has been a lack of formal econometric work in the literature to systematically quantify the relationship between location choice of foreign investors in China and federalism, Chinese style. This study develops a spatial dynamic model that explicitly addresses spatial externalities and path-dependent effects of inward FDI and host location attractiveness, in examining the spatial distribution of inward FDI in China under federalism, Chinese style. An empirical application of this model to a dataset of inward FDI across Chinese provinces over 1997 to 2012 shows that the location of FDI in China is determined by a combination of negative spatial externalities and positive path-dependent effects of FDI, and different host regional characteristics. This result implies that the Chinese market is highly fragmented for foreign investors.

Location choice of FDI firms and environmental regulation reforms in China

By examining the data on 13,663 newly established FDI firms and the environmental regulation reforms between 2000 and 2010, this paper studies whether foreign investors in China exhibit pollution haven behavior. Our analyses indicate that fewer FDI firms locate in provinces with more stringent environmental regulations (i.e., with higher pollution levy rates). Consistent results are found when we examine the individual firm’s location choice decision. We further find that firms’ location patterns respond to the changes in environmental regulations. In particular, their pollution haven behavior becomes more significant when the changes bring greater inter-provincial differences in environmental stringency.

The Readiness of Banks in Knowledge Management: A Study of Thre e Private Commercial Banks in Bangladesh

Doing business in and with China has become much easier than it was decades ago. But doing business does not guarantee that everyone will make money. China has embarked an unprecedented economic growth since its economic reforms (1978) three decades ago, rising to become the world's second largest economy today and will become largest by 2020. A new path under the 12th Five-Year plan (2011-2015) towards sustainable and balanced development, alongside a focus on boosting domestic consumption is opening new opportunities in china for continued industrial innovation and business expansion. China still holds a number of challenging areas for foreign investors. Beside the cultural and language challenge, business men might be faced foreign exchange restrictions, anti-trust laws, intellectual property rights and diversified people in all over china. China is also facing raw material shortages, lack of infrastructure, corruption in many sectors, growing income inequality, environment pollution and maintain stability in the society. Despite the challenges, many factors contribute to a positive business environment in China. Many gaps that exist in China provide opportunities for businesses to fill these gaps. In order to overcome many challenges, there are different forms of business might be opened by foreign investors in China like equity joint ventures, cooperative joint venture, wholly foreign owned enterprises, joint stock companies, foreign enterprises, branches of foreign enterprises and so on.

Using Chinese managerial values to win the war for talent

China's rising importance as an economic and political power makes it crucial for Western business to understand what drives Chinese managers and leaders. For foreign investors in China, this is even more important as they compete for increasingly scarce managerial talent. This contribution uses original research, including in-depth interview and survey data, to examine the values of two generations of Chinese business managers. We use these data to help understand employees' motivations and how multinational corporations (MNCs) can more effectively design human resource management systems to attract, retain and leverage talent in China. The piece concludes by suggesting successful strategies for attracting, managing and retaining staff in MNCs in China and winning the war for talent.

An Anatomy of Automation Business Opportunity in China in Times of High Wages: Taiwanese Businessmen Invested in China as a Case

China’s “The Twelfth Five-Year Plan” sets a tone to turn China “from a strong nation to a nation with wealthy people” in its national development policy. This policy is expected to increase hiring cost to foreign investors in China and indirectly creates potential business opportunities for automation. This research surveys a score of Taiwanese businessmen in China and finds their primary motivation for investing in China is to gain access to labor force. A majority of Taiwanese factories have longer working hours. Their needs for automation are mainly in quality control and testing, information system, and material handling and storage.

Current Situation of Stealth Acquisition in China

After China was accepted as a formal member to the WTO and issued its new Anti-Monopoly Law after some thirteen years drafts, there is a tendency which is becoming more and more significant during the past several years. Foreign investors in China have given up a way to simply set up their own factories within the territory as they did in the past thirty years since China reformed and opened its market, instead, nowadays through the cross-border mergers and acquisitions to acquire Chinese enterprises to enter the Chinese market as the main way becomes preferred by most of them. This new tendency cause foreign mergers and acquisitions to take more subtle and diverse ways such as joint ownership as well as seizing indirect ownership of domestic enterprises by financial tools, which is becoming an uprising new issue and task of Anti Monopoly regulation in China. On the other hand, after the MOFCOM issued its new guideline against stealth acquisition, it becomes a common concern for foreign investor and their lawyers as well. This article tend to address the reasons and under what circumstances that Chinese policy maker take into their considerations in regard of this issue.

CGE 모형에 의한 한·중·일 FTA의 거시경제효과 분석

East Asian countries including Korea were mainly interested in multilateral cooperation trade policy under the GATT/WTO system in early 1990s. Due to Asian financial crisis of 1997-1998, however, their interests were changed toward bilateral and regional free trade arrangements, development of regional financial arrangements, and regional crisis prevention and management capability. Korean government, since the Korean financial crisis in 1997, has emphasized more on regional cooperation trade policy rather than multilateral cooperation so as to minimize negative effects caused by other FTAs. As the first bilateral free trade arrangements, the Korea-Chile FTA(free trade agreement) were effective from 2004, three more FTAs, with Singapore, EFTA, and ASEAN, have come into effect and Korea has been further negotiating free trade arrangements with Mexico, Peru, Australia, New Zealand, GCC, and Canada. Korean government has considered FTAs among Korea, China and Japan very important not only because the free trade area of them, if it were built, would be the third largest economic bloc in the world in terms of their GDPs but also they are increasingly interdependent, economically and politically. Both China and Japan are major trading partners to Korea. In 2008, China and Japan is the first and the second largest export market to Korea and the first and third largest importing partner. Furthermore, Korea is also one of major foreign investors in China and the third largest importing partners to Japan. Despite the importance of either bilateral or trilateral FTAs among Korea, China and Japan, their economic effects have not been evaluated enough yet in contrast with much debate on the Korea-U.S. FTA or the Korea-EU FTA. In particular, as most of studies did not take into account the impacts of worldwide tariff cuts due to free trade arrangements pervasive in the 2000s, especially among East Asian countries, and thus the macroeconomic effects of the Korea-China-Japan FTA would be incorrectly estimated. It has been argued that the economic effects of the Korea-China-Japan FTA would not be fully examined for lack of information about the content and negotiation process between them, which should have been provided by government. This paper critically examines the macroeconomic effects of the free trade area among Korea, China and Japan and bilateral FTAs between them using the GTAP CGE model under various scenarios including both the Korea-Chile and the Korea-ASEAN FTAs which are currently in effect. In simulating economic effects of such free trade arrangements, the paper uses the GTAP static CGE model based on a new GTAP data set. The paper comparatively analyzes the macroeconomic effects of the bilateral and regional free trade arrangements of the three countries can be caused by either tariff reduction or elimination. Most of all, the GTAP CGE simulated results show that under the assumption of the full elimination of tariffs in all agricultural and manufacturing sectors except the service industries, Korea's real GDP would be expected to increase by 0.28~0.65% due to the Korea-China FTA or the Korea-Japan FTA and by 0.07~0.60% due to the free trade arrangement of the three countries. The results indicate that Korean government might overestimate the macroeconomic effects of the FTAs among the three East Asian countries and therefore it should re-examine the FTA policy strategies. Second, the CGE simulation results indicate that the economic effects of the Korea-China FTA in terms of a change of GDPs are expected to be larger than those of the Korea-Japan FTA. Next, the simulation results show that both the Korea-China FTA and the Korea-Japan FTA would not be complementary. The economic effects of the Korea-China FTA would be offset by the Korea-Japan FTA. This implies that there is no robust evidence for government argument that both the FTAs should have complementary effects.

China's policies on foreign‐invested travel agencies upon its entry to the WTO

PurposeBased on the commitments made when it joined the World Trade Organization (WTO) in 2001, China began to allow the establishment of foreign‐invested travel agencies. During this transition period, China promulgated travel service‐related policies and paid a great deal of attention to this specific business market. This paper aims to analyze the said tourism policies and provide suggestions to foreign investors for their future business activities in this promising market.Design/methodology/approachThe study uses both primary and secondary data to specify China's policies on foreign‐invested travel agencies upon its accession to the WTO and discuss foreign investors' entry modes and operating strategies for joining the market. Hall's model is employed to examine the policy‐making process, including policy demands, policy decisions, policy outputs, and policy impacts.FindingsSome foreign investment‐related tourism policies were implemented ahead of the schedule to which China committed upon its entry to the WTO. The tight nature of the policies implemented meant that only 25 foreign‐invested agencies had survived in China by August 2007. Industry professionals recruited for this study commented that the nature and pattern of FDI in this market has been successfully framed by the policies adopted.Practical implicationsThe entry modes that foreign investors in China's travel service market should adopt and the detailed operating strategies they should use are discussed.Originality/valueThe paper can be seen as a successful and enlightening attempt to pave the way for future researchers to engage in further discussions about FDI in tourism in a political environment, particularly in developing countries.

The Location Decisions of Foreign Investors in China: Untangling the Effect of Wages Using a Control Function Approach

There is almost no support for the proposition that capital is attracted to low wages from firm-level studies. We examine the location choices of 2,884 firms investing in China between 1993 and 1996 to offer two main contributions. First, we find that the location of labor-intensive activities is highly elastic to provincial wage differences. Generally, investors' wage sensitivity declines as the skill intensity of the industry increases. Second, we find that unobserved location-specific attributes exert a downward bias on estimated wage sensitivity. Using a control function approach, we estimate a downward bias of 50% to 90% in wage coefficients estimated with standard techniques. I. Introduction

Tunneling as an incentive for earnings management during the IPO process in China

Using a sample of 185 Chinese IPO firms listed on the Shanghai Stock Exchange during the period 1999–2001, we show that related-party (RP) sales of goods and services could be used opportunistically to manage earnings upwards in the pre-IPO period. We also provide evidence that such behavior may be motivated by the prospect of tunneling opportunities in the post-IPO period, i.e., exploiting economic resources from minority shareholders for the benefit of the parent company. We provide evidence of one such opportunistic tunneling tool: non-repayment by Chinese parent companies of net outstanding corporate loans made to them by their newly listed subsidiaries. Furthermore, we provide evidence in support of our assertion of an association between such tunneling behavior in the post-IPO period and earnings management via abnormal RP sales in the pre-IPO period. Finally, we demonstrate the apparent failure of investors in Chinese IPOs to perceive the link between the two phenomena. The results enhance understanding of the motives for and consequences of earnings manipulation during the IPO process. They highlight a potential additional investment risk facing foreign investors in China’s capital markets as well as in Chinese firms cross-listed in non-Chinese stock exchanges, and have policy implications for China and other emerging markets which need to improve the protection of minority shareholders’ rights.

What attracts foreign direct investment in China’s real estate development?

Foreign direct investment in real estate development (FDIRE) in China has been disproportionately agglomerated in the coastal region while has considerably diffused to some inland provinces along the Yangtze River. There is also significant spatial autocorrelation in the provincial distribution of FDIRE. Controlling for the spatial effects, statistical analysis indicates that FDIRE follows their international customers to China and pursues local profit opportunities as well. They avoid high financing cost and labor cost provinces but favor provinces with higher housing prices. FDIRE in China responds to the provincial differences in land and housing commercialization, and demands good regional governance, strong law enforcement and developed services. The findings imply that foreign investors in China’s real estate industry stress returns to capital while appreciate the conducive institutions when choosing locations.