Analysis of the success and failure of doing business in China
It was not until 1949, about one hundred years after it embargoed foreign trade with the West, that China opened up to foreign investment and to the world. At this time international trade was allowed to provide limited access for foreigners in what amounted to a special enclave of Beijing. However, it would take another thirty years before China finally embarked on its path of economic takeoff with an export-driven growth model.
Regardless, the favorable attitude towards business among Chinese government officials has been demonstrated consistently throughout the country's history since 1949, even as Western nations were generally wary of Asia before their economic developments began in earnest in the 1980s and 1990s. While these nations were still in a state of political turmoil, China's leaders were happy to encourage their citizens to engage in business, which was reflected in a marked increase in the number of foreign companies doing business with the country.
This trend continued throughout the early 2000s, when China was enjoying its most recent period of export-driven growth. In the years before this rebound, foreign investment played a crucial role in helping China develop and modernize. Foreign investors brought new technologies and capital into the country as it sought to transform itself into an industrial powerhouse. It is not surprising that when such an initiative results in an economic boom, other countries also rush to make their mark on this upsurge.
What is surprising and important to note, however, is that throughout this period of growth China has continued to be receptive to foreign direct investment (FDI), because only about 10% of the country's exports were produced by foreign trade. This is quite a different story from the one observed in other emerging Asian economies, such as India and Korea, which churn out exports from their own domestic markets at a much faster rate than imports . But China is different in that, as a developing nation, it needs access to foreign capital to build the modern infrastructure and industry necessary to take its trade to the next level.
Furthermore, over the past five years, China's banking sectors have grown dramatically as loan rates have plummeted. This help explain why Chinese banks are now lending more money than they ever did before. And it is this loan money that is making it possible for companies like Huawei Technologies and ZTE Corp. to invest so much in research and development (R&D) that has put them on such a clear trajectory of growth over recent years.
All of this comes at a time when Western economies are experiencing slowdowns and even recessions, while they continue to pay lip service to economic stimulus measures. At the same time, China has been increasing its production capacity at a tremendous rate. This is important because China is now the world's largest exporter, accounting for more than one-quarter of global exports and one-third of all industrial output.
This trend has continued through the past year and found expression in statistics such as the fact that since January 2011 China's exports have risen almost 45% while imports have grown by just 29%. But this growth has been accompanied by a growing sense of uncertainty and concern among other Asian countries.
India, for example, faces increased competition from Chinese imports. In addition to the fact that many Indian businesses are losing to the Chinese government in the pursuit of contracts, India is also voicing concerns over China's practice of dumping its wares on world markets at below cost prices. Meanwhile, smaller Asian economies have complained about a flood of cheap Chinese goods that have flooded into their countries and driven down domestic production. As a result, they have sought to impose "countervailing" duties on some Chinese imports, while they continue to complain about unfair competition in terms of a lack of transparency and even dumping by the Chinese government.
It would be wrong to look at China as an "Asian Tiger" from the perspective of our more familiar model. In general, as a developing nation China needs to remain open to business and embrace globalization. But with its enormous growth, it is likely that many Asian nations will view China more critically than they have in the past. This development will give rise to a more cooperative and less confrontational attitude on trade among the major economic powers in Asia.
http://www.asiasentinel.com/index.php?option=com_content&task=view&id=1439&Itemid=129
Title: Business Opportunities in China's Aircraft Industry
Date: August 8, 2011
Source: AeroSpace China 2011 Exhibition
Vietnam is a developing country. It has two main industries, the agricultural and the manufacturing industries. The latter is slowly growing to be important for the economy of Vietnam, attracting many foreign investors from around the world to invest in Vietnam. In addition, there are many possibilities for foreign trade as it has very close ties with many ASEAN countries such as Thailand, Indonesia and Malaysia; also with other Asian countries such as Japan and China. In addition, the country is connected to the international trading market through the sea routes.
Vietnam’s government has taken steps to make sure that the country becomes a competitive and attractive investment destination. For example, in August 2006 it has signed an agreement with China calling for an increase in trade between the two countries. In recent years, China has been Vietnam's largest trading partner as well as a source of foreign direct investment (FDI). In 2010 FDI in Vietnam amounted to over US$1.2 billion while trade increased from US$8.3 billion in 2009 to US$10.9 billion in 2010 with a growth rate of 56% and 28% respectively during this period. China has become the second largest investor in Vietnam. To stimulate even more trade, in November 2006 the two countries signed an agreement to increase FDI in infrastructure and manufacturing sectors as well as create a working group to discuss ways to relax entry barriers for companies from both countries.
Since 2004, FDI inflows into Vietnam have grown by an average of 30% per year and it is estimated that 2011 will be a record year with foreign investments reaching US$15 billion. Before 2008, most of the foreign investment came from Asian neighbors such as China, Indonesia and Malaysia with close to 70% of this investment being from these three countries. Since 2008, however, the investment from China has increased a lot and made up for the decrease in foreign investment from nearby Asian countries.
According to the United Nations Conference on Trade and Development (UNCTAD) statistics, Vietnam received a total of US$1.4 billion worth of Chinese FDI in January 2010 when compared to US$5 billion in January 2009. This significant increase was primarily due to the decision by some Chinese companies to move R&D centers for their technology businesses back to China. Some of these companies include Tencent, Alibaba and Huawei as well as other large Chinese electronics companies such as Haier Group, Lenovo Group and ZTE Corp..
Conclusion
The aircraft industry in Vietnam is still in its relative early stages of development. But there is a lot of potential for growth in capacity and technology in the foreseeable future. Already, Vietnam’s government has taken steps to make sure that the country becomes a competitive and attractive investment destination. For example, it has signed an agreement with China to increase trade between the two countries as well as encourage foreign investment from China. It also sees the possibility of large investment by Chinese companies such as Huawei Technologies and ZTE Corporation , both of which have R&D centers in Vietnam, to locate their manufacturing plants in Vietnam.
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