Recently years, oversea investment is very popular across the world and becoming a controversial problem in international economics. Not only the developing countries in Asia or southeast Asia need oversea investment, but the developed counties such as America in North America, German and France in Europe also need more investment from oversea. So we may see that there must be some benefit for each countries between the invested country and the country to be invested, certainly, in meantime the country to be invested should be more favorable by the investment from oversea. There is the concept that need to be know. Oversea investment is also called Foreign Direct Investment (namely FDI). it means the investment in a business by an investor or invested country from abroad for which this oversea investor should have controlled the company purchased. Certainly, as a extension of terminology related oversea investment, the Organization of Economic Cooperation and Development, shortcut as OECD, has been defined that control as owning at least 10% or more of the business; Multinational corporations (MNCs) is for business that make foreign direct investments (FDI). Returning to the topic, by this time I analyze about oversea investment through its two aspects, advantage and disadvantage.
Advantage for Oversea Investment
- Convenient foreign trade business
Nowadays, the most of advocacy is about doing business for multinational actions, we may sources and sell products with the corporations in other countries. However, meanwhile there is tariff of own importing to be the barrier between importing company and exporting firm sometimes. Another reason is that some of industries have to require their presence in the oversea market so that guarantee their sales and plan will be absolutely consensus. If the foreign company adapt FDI, all of these issues will be no problem.
For instance, America Apple Inc. Has invested more money to build factory abroad, actually company’s main target market is China. According to the demand of China market, they build factory local so that lower its cost and improve own service.
- Foster and prompt about economy and employment
Along with oversea investment, target country own more benefit such as economic increase and higher rate of employment. Because investor build company in target country and bring more fund there. This is good action to create new chance for local workforce.
For example, there was an investment from China to mid-west of United States, then the invested projects at the local directly created employment position about thirty six thousands. Around 2013, the event of Detroit “bankrupt” make people to sigh for this well-known “Auto Town”, and at that time the most of young “evade” from this city and try to find new livelihoods. After that, a lot of China enterprises began to merge and green land investment and realized investment amount over $4 billion dollars, meanwhile created approached 10,000 of job opportunities. Certainly, China investors’ actions of oversea investment also progress local related industries’ development such as manufacturing, technological industry and service industry as the biggest B2B platforms in China. It will be called double win.
- Exchanging of resources
Oversea investment will allow resources transfer from other countries to target country and related exchange of knowledge and skills. Certainly, the countries are given access will learn new technologies and skills from investors.
Disadvantage of Oversea Investment
- Stress and challenge to domestic companies
Certainly, benefits and malpractices are existence together. When target country may prompt own economy, increasing employment and gaining more external resources and technology skills, however the local companies will also face stress and challenge and then enlarging competition for local company.
Oversea investment sometimes will lead investors into a awkward situation because target country’s government may control your property and assets according to their political changes. Certainly, this circumstance normally is happened during some undeveloped countries and developing countries.
- Currency exchange rates considered
Such as in the United States, England, some of European developed countries, they own stronger currencies with higher exchange rates. That is why we have to survey local concrete situation from governmental policy till internal currency exchange rate. Actually the investors from developing countries invest into one of these markets through oversea investment, then will burden higher costs for business.