How Chinese enterprise can overcome barriers to ODI

Description: 

"Chinese enterprises are frequently encountering obstacles as they invest in overseas markets. Foreign direct investment activities are often politicised because they can impact the domestic politics of host countries. Overseas direct investment (ODI) can bring new rules and practices for corporate operation, which can trigger political debates regarding standards of ‘market behaviour’ in host countries. The most direct effect of ODI is changing the income distribution of social groups in the host country. Those with positive views of ODI believe it can significantly increase the demand for labour in the host country and contribute to an improvement in labour conditions. But local owners of capital are likely to encounter rising costs and intensified market competition. Those with a negative view of ODI believe that it can widen labour income gaps and worsen conditions for low-income groups. A pro-labour government may encourage ODI inflows that contribute to improvements in workers’ wellbeing, while a pro-capital government may encourage ODI inflows that will lower labour costs. For these reasons, the type of political obstacles that investors encounter are closely related to issues of redistribution in the host country. Employment security is the biggest political appeal of ODI. ODI enterprises generally have a competitive advantage and offer higher wages and more stable jobs. But ODI inflows may have a negative effect on the employment of low-skilled workers in the recipient industry..."

Creator/author: 

Bijun Wang, Xiao He

Source/publisher: 

"East Asia Forum" (Australia)

Date of Publication: 

2019-11-07

Date of entry: 

2019-11-19

Grouping: 

  • Individual Documents

Category: 

Countries: 

Myanmar, China

Geographic coverage: 

Global

Language: 

English

Local URL: 

Format: 

pdf

Size: 

39.45 KB (3 pages)

Resource Type: 

text

Text quality: 

    • Good