China’s immense size and astronomic population size have long been attractive to world traders. From silk merchants traveling the Silk Road in the Middle Ages to the huge international investments of recent decades, the People’s Republic of China has long lured business-savvy minds.
In the late 1970s, China took its Great Leap Forward and transformed its sluggish domestic economy into a lively and enticing socialist market economy. In 2019, China’s GDP grew to US$14.5 trillion. Cementing the countries place among the leading world economies.
Foreign direct investment and China
The Ministry of Commerce of the People’s Republic of China valued Foreign Direct Investment (FDI) in 2019 at US$138 trillion. Coming from a total of 40,888 FDI projects.
For the Chinese economy, FDI is big business and since 1978 China had worked hard to encourage FDI and grow their domestic and international markets exponentially.
Five factors to consider when investing in China
For business leaders, China is an extremely desirable option for FDI. China is enjoying a significant bounce back from the shock of the pandemic, making it even more desirable in uncertain times.
Whether you are planning to go it alone or use a global business consultancy firm to help, we take a look at five factors to consider when making a foreign direct investment in China.
Availability of capital
During the boom years before The Great Recession of 2008, surplus investment funds were flowing freely to emerging economies. China was chief among them.
Surplus investment funds have helped to increase the capital wealth of many Chinese people, who now have higher spending power domestically. A very desirable factor for businesses looking to invest in China.
Competitive markets
On the world economic stage, China has outpaced and outmaneuvered many other emerging economies to become a world leader. Its infrastructure network has been a key driver in its success, helping goods and people move easily around the country.
China’s commitment to innovative initiatives and development add to its attractiveness for FDI.
Financial incentives
The government of China actively promotes investment in commercial and entrepreneurial activities. To aid investment, there are numerous financial incentives such as tax breaks, grants, and subsidies available for businesses that invest in China.
These incentives can boost profits and aid in a business’s growth in the Chinese market quickly.
Stable government
China’s communist party has been one of the longest-standing governments in the world. Leader Xi Jinping has been at the forefront of China’s success for the best part of two decades.
The stability of his government makes China a perfect option for business FDI.
Size of the domestic market
China’s estimated 1.4 billion citizens make up the largest domestic market in the world. For businesses, this offers an exceptional opportunity to reach hundreds of millions of consumers easily.
Using FDI as a way into the Chinese domestic market is good business sense.
No matter your business reasons for making foreign domestic investments in China, with the support and guidance from a leading consultancy firm, you could reap the benefits of a booming world economy.