International Business - Foreign Direct Investment Essay

International Business - Foreign Direct Investment - leaven ExampleChina still holds and implements its policy that discourages or sometimes bans wholly foreign-owned investment. Certain intangible aspects welcome been recommended for foreign investors to put into consideration in order to run a successful stick bet on in China. These aspects are culture, common sense, law and understanding of finance which articulationly complement each separate in China business environment. Throughout the 1980s up to mid-1990s, Chinese government oversaw inbound FDI principally through entry intervention where the government emphasized FDI project ratification in which the government was capable to manipulate and influence FDI size, location, timing and sometimes partner selection. China way of relations with foreigners which is partly contributed by the countrys culture and government policy largely exhibited lack of experience in dealing with most MNCs hence most of these corporations re mained regulated (Grosse p.297). The concerns of Chinas government during this period largely came to spring regulation tendencies as to which industries should be opened to foreign investors and where FDI should be channeled to. Most enacted laws and regulations did not grant MNCs original control and operation powers instead these laws, rules and regulations became to be associated with how to control foreign company entry into the nations market (Grosse p.297). Carrying out research in 1993 Erramilli and Rao noted that joint venture as a like entry mode by MNCs become successful when the cultural space is relatively large amidst the host and home countries. Further the authors found out that there exist relationship between joint venture entry mode with the take aim of the host country wellbeing, the level of host government restrictions, and the level of competition in the host country (cited in Jiang, Cristodoulou and Wei par.3 ). At the same time literature conduct that MNCs entry mode decisions is largely affected and influenced by the host countrys investment policies. The popularity of joint ventures in China has been attached to numerous reasons with popular one being direct or collateral government rules requiring them in a certain circumstances to do so (Jiang, Cristodoulou and Wei par.3). Further joint ventures (JVs) in this country have resulted due to popular and widely held belief that JVs are likely to work with Chinese municipal governments well without much conflicts.