International Business: learning Journal 3

In these two weeks, we focused on the study that is investing abroad. Personally, I am very interested in the FDI in China as a country which rich in resources such as labour. At recent, China is the one of the developing countries that has the larges FDI inflow. As the FDI increased, the economy in China has improved as well. The FDI effects China not only with benefit but also with negative influence. The increased of FDI reflects the waste of capital in China and the national welfare loss as well. However,the FDI inflow is still important to the local government to improve the economic. In addition, the FDI outflow is important as well. As one of the largest home appliance manufacture in the world,Haier became a foreign direct investors since it built factories in India,Indonesia and Iran. Then, it built factory in America. It is weird. As we know, the one of the competitive advantages in China is the cheap labour force. However, Haier built the factory in America which has higher wage level than China. The benefit that Haier gains from the factory in America is:
1. Reduce the cost of transportation
2. Reduce the transit time
3. Attract the American by ‘made in USA’.
In addition, the factory can bring other intangible benefit.
People have different opinion on FDI. It brings not only benefit but also cost to the countries.

Moreover, we learned the chapter 8 which is the capitalizing on global and regional integration. This chapter includes some agreements that hard to remember. That is one of the reasons that I didn’t feel very good on the quiz. However, as the global economic integration, to have a good understanding on these agreements is important to the international business.


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