Cemex
11/1/2013
OREIGN
Learning Objectives
IRECT
• Examine how FDI is implemented in different types
• Identify the factors that influence FDI
• Understand why and how host government encourage FDI inflow
NVESTMENT
1
2
1
FDI occurs when a firm invests directly in facilities to produce and/or market a product in a foreign country
2
3
4
3
4
1
11/1/2013
5
2
11/1/2013
– Investment in the “same” industry
– Nokia & Samsung build factories in Bac Ninh, Thai Nguyen
(Vietnam)
– Investment in upstream supplier (backward) or downstream purchaser
(forward)
– Backward: invest in input industries abroad to serve production
– Forward: invest in marketing, distribution channel
10
Wholly owned direct investment
Joint venture
11
12
3
11/1/2013
Market factors
•Size, growth of national market •Size, growth of regional market •Proximity to key export markets Human resource factors
•Cost, availability, productivity of skilled labour
•Availability, quality of managerial workforce
•Employment regulations
Political & governmental factors
•Political stability
•Openness to foreign investment
•Extent of bureaucracy and red tape •Transparency, corruption
Legal and regulatory factors
•FDI regulations
•Nature of legal system and laws
•Intellectual property protection
•Extent of tariffs, trade barriers
Factors to consider in selecting FDI locations Infrastructural factors
•Availability , quality of local manufacturing •Efficiency of physical distribution •Cost, availability, quality of utilities and finance
•Quality of marketing and distribution Profit retention factors
•Types and level of taxes
•Tax rates for profit repatriation •Complexity of tax system
•Rate of inflation
Economic factors
•Cost of land and facilities
•State of local economy
•Currency stability
•Extent of regional integration and free trade
• Balance of Payment (BOP) effects
- BOP:
OREIGN
Learning Objectives
IRECT
• Examine how FDI is implemented in different types
• Identify the factors that influence FDI
• Understand why and how host government encourage FDI inflow
NVESTMENT
1
2
1
FDI occurs when a firm invests directly in facilities to produce and/or market a product in a foreign country
2
3
4
3
4
1
11/1/2013
5
2
11/1/2013
– Investment in the “same” industry
– Nokia & Samsung build factories in Bac Ninh, Thai Nguyen
(Vietnam)
– Investment in upstream supplier (backward) or downstream purchaser
(forward)
– Backward: invest in input industries abroad to serve production
– Forward: invest in marketing, distribution channel
10
Wholly owned direct investment
Joint venture
11
12
3
11/1/2013
Market factors
•Size, growth of national market •Size, growth of regional market •Proximity to key export markets Human resource factors
•Cost, availability, productivity of skilled labour
•Availability, quality of managerial workforce
•Employment regulations
Political & governmental factors
•Political stability
•Openness to foreign investment
•Extent of bureaucracy and red tape •Transparency, corruption
Legal and regulatory factors
•FDI regulations
•Nature of legal system and laws
•Intellectual property protection
•Extent of tariffs, trade barriers
Factors to consider in selecting FDI locations Infrastructural factors
•Availability , quality of local manufacturing •Efficiency of physical distribution •Cost, availability, quality of utilities and finance
•Quality of marketing and distribution Profit retention factors
•Types and level of taxes
•Tax rates for profit repatriation •Complexity of tax system
•Rate of inflation
Economic factors
•Cost of land and facilities
•State of local economy
•Currency stability
•Extent of regional integration and free trade
• Balance of Payment (BOP) effects
- BOP: