国际商务英语课文电子版lesson (19).doc

Lesson 19 Foreign Direct Investment Foreign direct investment is the major form of international investment, whereby （through FDI） residents of one country acquire 获得assets in a foreign country for the purpose of controlling and managing them. Why does FDI occur? An instinctive本能的 answer to the question by many people may be that the rates of investment returns（投资回报率）are higher in a foreign country. This answer, though seemingly似乎plausible似乎有理的 , is actually farfetched牵强的. Just think of the fact that Britain is both a major source of FDI in the United States and an important destination for FDI from the country. We cannot say the rates of investment returns in the United States is at the same time higher than those in Britain (which explains investment into it) and lower (which justifies说明的理由 capital flow to the opposite direction). 我们不能说，因为美国的投资收益率高于英国的投资收益率，所以资金流向美国。同时，又因为美国的投资率低于英国的投资率，所以资金又同时流向英国。We should therefore look for more specific factors influencing a firms decision to undertake（to engage in从事） FDI.The USASourceDestinationThe UKSourceDestinationControlling costs is the first major motivation for engaging in FDI. And lowering production costs is an important consideration. A foreign country may have lower land prices, tax rates or cost of labor, all of which will reduce the production costs to a considerable degree, making foreign locations more attractive. Transportation cost which may be very significant很大 for some products such as beverages will also encourage an enterprise to engage in production in the foreign market through FDI to save节省 the fees for long distance transportation.Gaining access to natural resources （获得自然资源）is another major motivation for firms to undertake FDI. Integrated（综合性的开采、炼油与销售）oil companies, for example, often invest abroad to obtain access to new oil deposits（油田,油矿）when domestic (oil) reserves石油矿藏 are decreasing. Some international enterprises negotiate with host governments 东道国政府for availability 获得of raw materials in return for FDI. For instance, a Philippine company invested in building tuna canneries on an Indonesian island as part of a deal with the Indonesian government to allow some Philippine tuna boats to fish its seas.Sometimes it may be more advantageous更加有利的 to invest in foreign firms for the purpose of utilizing利用 their existing现有的 advanced technology than to engage in research for the development of similar technologies. That is also a motive for making direct investment abroad. Such examples are Swiss pharmaceutical factories 制药厂investing in American biogenetics 生物基因companies to make use of their biotechnology生物技术. This type of investment occurs mostly between an enterprise that has sufficient capital but is in urgent need of the necessary technology and one that is in requirement of fund for expansion.In addition to the above supply factors（供给方面的因素） there are also some factors on the demand side（需求方面的因素）encouraging enterprises to make investment abroad.The first of these factors is the necessity to have a physical presence in the market that provides easy access to customers. It is hard to imagine Quanjude Restaurant to sell Beijing roast duck to Japanese consumers from the Chinese capital. Similarly it is next to impossible 几乎不可能for a British insurance company to market（sell）life insurance to continental（European）customers.If such enterprises want to be competitive in foreign markets, it is advisable 最好for them to make foreign direct investment.Operating directly abroad enhances the visibility (fame) 知名度of a firms products, making local customers feel more assured 放心about the things they buy. Manufacturing in an overseas market will enable the investor to have a better knowledge of the specific requirement of foreign consumers and adapt (adjust) their products better to their needs, which will help expand its sales volume in the host market. The buy-local attitude common among host governments greatly facilitates (makeeasier) the marketing efforts of the enterprise. These, together with more convenient after-sale service, form marketing advantages encouraging enterprises to engage in FDI instead of selling their products by way of exportation. The success of vehicle manufacturer like German Volkswagen in China is a good example of taking marketing advantages by way of FDI.Another motivation for FDI is customer mobility. When an important client of a company engages in FDI and starts a factory in a foreign market, the firm, either a parts supplier or service provider, may very likely follow its client and make FDI overseas so as not to lose the business to its competitors. The building of factories and warehouses by Japanese parts suppliers in the United States following the construction of auto assembly plants by major Japanese automakers in the country is an example of such kind of FDI. The introduction 采用of JIT （just-in-time）inventory management system increases the necessity of such investment, since the system is meant to minimize/maximize the inventory 库存to increase efficiency, putting the suppliers at disadvantage to make supply from a distant foreign country.Two political factors may also be at work in a firms choice to operate directly abroad through FDI. The first is to get around避开 trade barriers such as quotas 配额set by foreign countries or even VER（voluntary export restriction自动出口限制） imposed by ones home country. Saving tariff, the major form of trade barrier, is needless to say, an obvious motivation for undertaking FDI. Favorable investment policies practised by host governments such as tax reduction税收减让 or tax holidays免税期, rebated (reduced减少的) land-use fee etc. are an important incentive动机 for FDI. An illustrating (convincing/persuasive)很有说服力的 example is China that attracted large amounts of foreign capital largely (mainly) through preferential policies(优惠政策).FDI is mainly practised in three forms: Building new enterprises, purchasing existing facilities forming joint ventures.Building new enterprises is often called “the green field strategy绿地战略”.(It is one form of FDI. It refers to building new enterprises in a foreign country) The firm builds new facilities on land bought or leased租借in a foreign country before starting its new operation. Such a firm can make its own choice in respect of (in terms of / regarding) the site, and install up-to-date facilities. The relevant costs are often lower because of the incentives (favourable investment policies) offered by the local government. Moreover, the new enterprise operates free from (without) such troubles as existing debts, backward equipment and outmoded（outdated过时的） management procedures. But of course, such a wholly foreign-own外资独资 enterprise will have some difficulties to operate all on its own efforts. It has to face the local culture such as laws, regulations and practices, and has to recruit and train local employees.Purchasing existing facilities is known as acquisition.收购 (It is one form of FDI, which means purchasing existing facilities in a foreign country) This is a common means of entering a new market. The assets of the acquired被收购firm such as equipment, technology, employees, brand names and distribution networks 经销网络are all there (ready for use) for use. The purchaser收购方simply integrates 纳入all these into its overall strategy before gradually transforming改变 them to suit its own purposes (culture). It does not have to start from scratch白手起家 and face the difficulties in the greenfield strategy. But it has to take responsibilities for all the liabilities 债务of the purchased firm, and deal with existing problems in management, labor relations, environmental protection, obligations etc.Forming joint ventures with foreign firms is a popular form of FDI. A joint venture is an independent business entity实体 founded and owned by two or more partners called parents. The proportions of ownership between the partners may be equal or unequal depending on their respective investments that are mostly in the form of capital but may also be in land, equipment, or intellectual property. As a separate legal entity法人实体, the joint venture has a formal organizational structure, making this form of alliance联盟 more stable and broader in business scope/business line. It reduces the cost