Investing in the other countries provides several benefits to the investors, which include attractive, and more returns and the diversification opportunity. The introduction of the investment products has now made the assessment of international markets easier (Agarwal & Ramaswami, 1992). But, at the same time it is essential for people who are making investments overseas to have the basic idea and understanding of the working of international markets.
Being CEO of the organization based within the United States, I will invest in China. This is due to the fact that the economy of China has huge potential; it provides the opportunity of management of assets to the firms that are eager to do investment in the country. Also, the Chinese government is providing all the comforts to the international firms for making investment in China, but is also maintaining control over the currency. Furthermore, it is advantageous to make investment in China, because the country is supporter of liberalism, which further promotes foreign investment.
The other factors that make China a feasible country from investment point of view are the huge size and remarkable growth of the economy with further vivid prospects, availability of the resources and cheap labor, international trade openness, access to the international markets, alteration and development of the regulatory framework, protection and promotion of the investment. All these factors facilitate the investor and encourage him for the investment due to favorable conditions prevailing in the economy
Furthermore, there are some facts that should be taken into consideration, such as China is a communist nation, and its rules and regulations for business are entirely different than the rules and regulations prevailing in the United States. Furthermore, there are also cultural and traditional differences between the two countries (Kamath, 1992). So, before investing in the country, the customs, traditions and culture of that country should be taken into consideration. In case any investment is done in the other country for the purpose of establishing business, but this business is not proving the products or services according to the needs and wants of people will result in the failure of business and such investment will turn be destructive instead of being constructive. For example, considering the case of Wal-Mart that has faced several problems at the time it started business in China. These problems have arisen due to cultural differences and perception of people for the American countries (Bose, 2012).
Moreover, the regulatory bodies of the country in which investment has to be made, should be considered by the investors. For example, In China the shares are traded on Hong Kong Exchange, which is a principal regulatory body. This body is just the same as United States Securities and Exchange Commission. Its key role is to provide protection to the public investors and assistance to the Finance Secretary of Hong Kong for maintains market properly.
In a nut shell, international investment is a wise decision for the companies that want to go global and desire expansion. China is a country that present remarkable investing opportunities to the investors and provide ease of operations. But, the investors should have the knowledge the culture and tradition of the country where he wants to make investment. This is due to the fact that the tradition and culture are the sensitive issues that are attached emotionally with people, so any deviation from these factors can result in the loss and the businesses have to suffer a lot. The prevailing rules and regulation of the country should be considered for ensuring smooth functioning of business.
Bose, Tarun Kanti. (2012). Advantages and Disadvantages of FDI in China and India. International Business Research, 5(5), 164-174
Kamath, Shyam J. (1994). Foreign direct investment in a centrally planned developing economy: The Chinese case. Economic Development and Cultural Change, 39, 107-130.
Agarwal, Sanjeev., & Ramaswami, Sridhar. N. (1992). Choice of foreign market entry mode: Impact of ownership, location and internalisation factors. Journal of International Business Studies, 23, 11-19