What is FDI? I believe that some people will not be able to react to this word at once. In fact, foreign direct investment is what we often call foreign direct investment, which refers to the capital flow that occurs when investors in a certain country purchase or merge the assets and interests of foreign companies, or set up their own wholly-owned branches abroad, in order to obtain control of foreign companies and obtain long-term investment benefits.
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Modalities of participation in FDI.
Generally speaking, there are two ways to participate in FDI: one is the acquisition of companies from other countries abroad, which is the main form of investment; Another option is to set up a new company directly. Let's take a look at the advantages and disadvantages of each of them.
A new company is a company that is set up in accordance with the laws and regulations of the place where the company is registered, and the advantages of this type of investment company are:
1. The newly established company can be better established according to its own needs and expectations;
2. All employees of the newly established company are re-recruited, and there is no conflict between the old and new forces;
3. The newly established company has stricter confidentiality of the company's confidential technology and will not leak out.
Of course, everything has two sides, and the newly established company has its drawbacks:
1. Since the new company is in an unfamiliar country, the cultural atmosphere of each country is different, and the new company must adapt to the cultural and business environment of the place of registration for a relatively longer time;
2. Since it is a wholly-owned new company, the company needs to bear any debt risk.
M&A of foreign enterprises, the new actual controller of the foreign company of the acquirer, its advantages are:
1. There is no need to spend time to establish the company's image and reputation in the registered place of foreign companies, and at most it is to get used to the local working atmosphere and culture;
2. The risk borne by the individual is relatively small;
3. The company's technology can be shared together to serve the efficiency of the enterprise;
4. Better access to preferential treatment from foreign companies.
There are also disadvantages to mergers and acquisitions:
1. Because there are two different cultural groups within the company, it is easy to have contradictions and conflicts in the work;
2. Because investors do not conduct in-depth investigation of the acquired company before the implementation of the merger and acquisition, there is a great chance that the cooperative company will not meet their expectations.
Analysis of the current situation of foreign direct investment.
According to the latest report given by the United Nations ** and the Development Conference, in 2023, the world's foreign direct investment increased by 3 percent, which is beyond the expectations of the United Nations ** Association, after all, in 23 years of continuous conflicts between some countries in the world, political tensions are thought to have a certain negative impact on the economy.
At present, the situation of foreign direct investment is roughly based on different national conditions and different investment industries, some countries in 23 years of foreign direct investment ** obvious, such as the European Union countries and the United States, whether it is a new factory or international financing projects are ** obvious, especially the European Union, 23 years of mergers and acquisitions rate fell to negative. In some countries, on the contrary, strong investment has been obtained, with the amount of foreign investment soaring. For example, in the ASEAN countries of Vietnam, Thailand, Indonesia and West Asia, Saudi Arabia has seen a staggering 63 percent increase in new investment projects.
In general, the total amount and main body of foreign direct investment have increased, but the amount of investment in the investment industry that has skyrocketed before developed countries has declined significantly, and the high-tech investment technology industry still has a certain investment attraction in developed countries. Developing countries, especially those that can provide cheap labour, have received more investment. At the same time, due to the particularly strong investment inflows, individual countries have seen a significant increase in new projects.