international direct investment国际直接投资中英.docx

1、international direct investment国际直接投资中英International Direct Investment 1.1IntroductionStudying foreign direct investment (FDI) is important because production facilities abroad comprise a large and increasingly important part of international companies activities and thus are an integral part of the

2、ir strategic thrusts .In fact, FDI is now more important than trade as a vehicle for international economic transactions. No one explanation or theory encompasses all the reasons for such investment.1.2The Meaning of Foreign Direct Investment1.2.1 The Concept of controlFor direct investment to take

3、place, control must follow the investment; otherwise, it is known as portfolio investment. The share of ownership necessary for control is not clear-cut. If stock ownership is widely dispersed, then a small percentage of the holdings may be sufficient to establish control of managerial decision maki

4、ng. However, even a 100-percent share does mot guarantee control. If a government dictates whom a company can hire, what the company must sell at a specified price, and how earnings will be distributed, then it could be said that control has passed to the government. Governments frequently do impose

5、 these decisions on companies. But it is not only governments that may jeopardize the stockholders control. If some resource the company needs in order to operate is not regulated by the companys owners, then those who control that resource may exert substantial influence on the company. Because dir

6、ect investments can be difficult to identify, governments have had to establish arbitrary definitions. Usually, they stipulate that ownership of a minimum of 10 or 25 percent of the voting stock in a foreign enterprise allows the investment to be considered direct.1.2.2 The Concern about ControlGove

7、rnmental ConcernWhy should anyone care whether an investment is controlled from abroad? Many critic of the practice are concerned that the national interest of the best country will not be best served if a multinational company makes decisions from afar on the bases of its own global or national obj

8、ectives. For example, on the one hand, GM, a U.S. company, owns a 100-percent interest on Vauxhall Motors in the United Kingdom. GMs corporate management in the United States is concerned directly with and makes decisions about personnel staffing, export prices, and the retention versus payout of Va

9、uxhalls profits. This level of control concerns the British public because decisions that directly affect the British economy are being made, or at least can be made, in the United States. Private British citizens, on the other hand, own some shares of GM. Because these are not enough for control, t

10、he British citizens expend no time or effort on making management decisions for GM. Nor is the U.S. populace concerned that vital GM decisions will be made in the United Kingdom. This does not mean that noncontrolled investments are unimportant, however. They may substantially affect exchange rates,

11、 and they may play an important part in a companys financial management and strategy.Investor ConcernControl also is very important to many companies who are reluctant to transfer certain vital resources to another domestic or foreign organization that can make all its operating decisions independen

12、tly. These resources may include patents, trademarks, and management know-how, which when transferred can be used to undermine the competitive position of the original holders. This desire to deny rivals access to competitive referred to as the appropriability theory. In addition, operating costs ma

13、y decrease and the speed of technological transfer may increase when control is retained, for several reasons:1.The parent and subsidiary are likely to share a common corporate culture.2.The company can use its own managers, who understand its objectives.3.The company can avoid protracted negotiatio

14、ns with another company.4.The company can avoid possible problems of enforcing an agreement.This control through self-handling of operations (internal to the organization), rather than through contracts with other companies, is often called internalization. For example, Intel found that the transfer

15、 of technology to independent motherboard manufacturers in Taiwan was to slow, so it moved into Taiwan with its own production facility.Despite the advantages of control, many circumstances exist in which assets are transferred to noncontrolled entities, such as transferring trademarks and technolog

16、y through licensing agreements. In addition, companies lack resources to control all aspects of their production, supplies, and sale, so they funnel their resources too those activities that are most important to their strategies and their performance.1.2.3Methods of AcquisitionForeign direct invest

17、ment traditionally has been considered an international capital movement that crosses borders when the anticipated return (accounting for the risk factor and the cost of transfer) is higher overseas than at home. Although most FDIs involve some types of international capital movement, an investor ma

18、y transfer many other types of assets. For example, Westin Hotels has transferred very little capital to foreign countries. Instead, it has transferred managers, cost control systems and reservations capabilities in exchange for equity in foreign hotels.Aside from committing nonfinancial resources,

19、there are two other means of acquiring assets that do not involve international capital movements in a normal sense. For example, a company that exports merchandise but holds payment for those goods abroad can use settlement to acquire an investment. In the case, the company merely has exchanged goo

20、ds for equity. Although this method is not used extensively for initial investment, it is a major means of expanding abroad. Initially a company may transfer assets abroad in order to establish a sales or production facility. If the earning from the facility are used to increase the value of the for

21、eign holdings, FDI has increased without a new international capital movement. Second, companies in different countries can trade equity. For example, KLM in the Netherlands acquired a share of Northwest Airlines in the United States by giving Northwest owners stock in KLM, a move that helped integr

22、ate the competitive strategies of the two companies.1.3The Relationship of Trade and Factor MobilityWhether capital or some other asset is transferred abroad initially to acquire a direct investment, the asset is a type of production factor. Eventually, the direct investment usually involves the mov

23、ement of various types of production factors as investors infuse capital, technology, personnel, raw materials, or components into their operating facilities abroad. Therefore it is useful to examine the relationship of trade theory to the movement of production factors.1.3.1The Trade and Factor Mob

24、ility TheoryTrade often occurs because of differences in factor endowments among countries. But contrary to historical treatises on trade, production factors themselves also may move internationally. Factor movement is an alternative to trade that may or may not be a more efficient allocation of res

25、ources. If neither trade nor the production factors could move internationally, a country would have to either forgo consuming certain goods or produce them differently, which in either case would usually result in decreased worldwide output and higher prices. In some cases, however, the inability t

26、o utilize foreign production factors may stimulate efficient methods of substitution, such as the development of new materials as alternatives for traditional one or of machines to do hand work. For example, the production of synthetic rubber and rayon was undoubtedly accelerated because wartime con

27、ditions made it impractical to move silk and natural rubber, not to mention silkworms and rubber plants.1.3.2Substitution When the factor proportions vary widely among countries, pressure exist for the most abundant factors to move to countries with greater scarcity, where they can command a better

28、return. Thus in countries with an abundance of labor relative to land and capital, laborers tend to be unemployed or poorly paid; if permitted, these workers well gravitate to countries that have relatively full employment and higher wages. Similarly, capital will tend to move away from countries in

29、 which it is abundant to those in which it is scarce. For example, Mexico is a net recipient of capital from the United States, and the United States is a net recipient of labor form Mexico. If finished goods and production factors were both completely free to move internationally, the comparative c

30、osts of transferring goods and factors would determine the location of production. (However, as is true of trade, there are restrictions on factor movements that make them only partially mobile internationally, such as immigration restrictions in the United States that limit the legal and illegal in

31、flux of Mexican workers.)1.3.3Complementarity of Trade and Direct InvestmentDespite the increase in direct investment to produce goods for re-importing, companies usually send substantial exports to their foreign facilities; thus FDI usually is not substitute for exporting. In fact, about a third of

32、 world trade is among controlled entities, such as from parent to subsidiary, subsidiary to parent, and subsidiary to subsidiary of the same company. Many of the exports from parent to subsidiary would not occur if overseas investments did not exist. In these cases, factor movements stimulate trade

33、rather than subsidiary for it. One reason for this phenomenon is that domestic operating units may ship materials and components to their foreign facilities for use in a finished product. For example, Coca-Cola ships concentrate to its bottling facilities abroad. Foreign subsidiaries or affiliates also may buy capital equipment or su