International Investment In China Essay Example | Topics and Well Written Essays - 2500 words

International Investment In China - Essay Example However, associated with these opportunities are also risks confronting the businesses in the context of international investment. This essay primarily encompasses the direct investment concerns in the international business spectrum and also presents the case of Shell plc as an example of UK's direct investment in China. There has recently been an increasing trend on the part of the multinational corporations from the developed world to enter into trade and investment with emerging economies of the world. There happen to be several factors responsible to induce the foreign companies to invest in less developed or emerging markets. Samli and Kaynak (1984) refer to the concept of emerging markets as similar to less developed countries characterised primarily with agriculture based economy, high population growth levels, lower income levels, low literacy level, lack of substructure, and lack of capital etc. China is also one of the emerging economies of the Asian world, which is speedily climbing the ladders of economic progress and prosperity through a remarkable growth in various industrial and economic sectors. The recent rapid economic boom in China and open market policy has projected the country's image in the world as an attractive market for international investment (Sun and Chai, 1998). ... Chinese government and financial environment purposefully support and encourage multinational companies to enter the market so that it can affirm the consistent progress of the Chinese economy (Zhao, 2003). In the same vein, several UK companies having identified and analysed the opportunities in the Chinese market are making direct and indirect investment in the country that brings foreign reserves to the country as well as happens to be profitable for the these corporations. Huaning and Colin (2004) refer to the United Kingdom as the pre-eminent investor in China during the recent years among all the European Union countries. Case: Shell's Investment In China Shell happens to one of the major investor in Chinese market. In the year 2002, it entered the oil market of China with an investment of 255m (FT.com News, 2002). The company further expanded its business activities in the country and recently the company confided to a project concerning coal exploitation in a joint venture with a Chinese partner with a prospective investment of about 2.7b, probably the largest ever investment received by the country (FT.com, News, 2006). In this way, Shell plc invested in the Chinese market by way of direct investment. The increasing interest of Shell plc in the Chinese market is reflective of the investment attractiveness of the country with regard to its inexpensive labour, growing economy and surging demand. Determinants And Merits Of Investment By UK Companies In China Changhong and Weili (2002) propound that there happen to be two significant forms through which the multinational corporations invest in a developing country viz.