Chapter 1 Introduction
1.1 A Brief of what I am writing
Since the Chinese opening policy actualized in China in 1978, China keeps a high speed of growth rate. Brining in and utilizing foreign investment would be one of the most important strategies of basic national policies. Putting in practice of this strategy, China had resolved the fund lacking and low level of technology and management problems in economy construction. Under the leadership of Chinese leader Deng Xiaoping, China was testified of the most amazing economic transformations over 20 years, and it is likely to grow in importance both politically and economically.
On the other hand, the Chinese entering of WTO in 2001 also play a vital role in attracting foreign investment. Since the early 1990s, the amount of foreign investment that entering into China had increased sharply. In the continuous 6 years from 1996 to 2001, China utilized foreign investment actually exceed $ 40 billion per year and the aggregate had exceeded $ 400 billion. In 2001, this number reached $ 46.8 billion and achieved better levels in following years.
This chapter analyzes the particular process and results of my investigation including the data analysis and economic phenomena and their effects which the businesses I choose for the investigation. Methodology is a tool to collect and analyze both the primary data and secondary data. And the detailed methods I use are the questionnaire and survey and also telephone-interview to obtain direct information. In order to present the better understanding to readers on what I found, the following subheading would exhibit the information clearly:
? The general policy background on the multinationals’ economic and invest
environment in China.
1
? The reasons that overseas investment come into Chinese market. ? What kind of impacts the multinationals transferred to China. ? The great transformation on China
The probable results of my investigation exhibit the impacts (good effects mostly) in Chinese multi-aspects, which consist of national economy, personal livelihood and firms’ development, etc. Under the prefect Chinese economic development, the more than 20 years correct policies and appropriate investment environment played a significant role. Through the principal researches of Coca-Cola system in China, the readers could easy figure out the changes in China by a representative firm.
1.2 Literature Review
The Ninth Chinese International Investment and Trade Conference, which had invited the deputy director of Commerce Secretary Yuanyuan Gao (2005, accessed at http://news.eeff.com.cn/zc/2006/11/061123052546913.html), who argues that China adapt to the new situation of world economic development, exploit foreign investment logically, effectively and positively. Now, China had a greater power in attracting foreign investment year by year, and the current policies used in fetching foreign investment include three most important aspects, which are improving the legal environment for FDI, maintaining the consummate market environment and guiding more foreign companies into China. From this conference of Chinese government, I can realize the Chinese economic situation is suit for foreign investment very much and it actually has gained many investments in past several decades. The current policies applied in foreign investment bring more benefits to China, such as the upswing of employment rate, living standard and Chinese GDP.
2
There are many elements could influence the flow direction of FDI. According to the “Investment Analysis” which provided by “Market Modernization” (Zhao and Mou, 2007), the market environments play a very important role in whether the foreign companies invest in China. First, China had experiences of fast and stable economic growth over past 20 years and China has a great increase in purchase power in this period. China now became a huge and perfectly ergastic consumer market in the world. And China plays a very vital part in multinational’s global strategy. In addition, they also submit the second point; the investment environment is a mixture of multiple elements. The natural and long term elements called hardware environment, but the man-made elements called software environment. The man-made environments mainly indicate the policy environment, legislation environment and market environment. This element mostly includes entering of FDI, actualizing of national treatment, examine and approve for FDI from government, foreign exchange policies, financing environment, taxation policies, finance policies and imports and exports policies, etc. Good investment environment in China have acted an example to the world, currently China is the country that attracting the most FDI in recent years. My study will figure out the detailed information that supports the hardware and software economic environment in Chinese investment market, and how they benefit to China and foreign investors.
1.3 Investigation Structure
My investigation is organized as follows. Chapter 1 shows the readers a detailed brief which includes investigation title, contents and methodology, etc. Chapter 2 explains the total timescale in my investigation. Chapter 3 discusses the introduction, literature review and methodology what I used in my study. Chapter 4 presents a detailed analysis which content of case about Coca-Cola. At last, Chapter 5 considers the
3
evaluation of this whole investigation.
1.4 Methodology
This part outlines the analysis of the adopted methodology for my current investigation. “Methodology refers to the overall approach to the research process, from the theoretical underpinning to the collection and analysis of the data”. (Collis and Hussey, 2005:55) Collecting both the primary data and secondary data I use different tools to lay out the researches to readers. The secondary data may have a lot of sources such as journals, magazines, newspaper, business reviews, reference books and the Internet. Most of my literature search was from the college library based in Centre South University of Forest and Technology, some little others from the library of Changsha City and some book stores. Magazine and journal also give me some information to support my investigation. Mostly, I consult plenty of information from the internet, then choose the favorable data and used in my study.
The collection of primary data may use by different tools; they consist of interview and questionnaire. Quantitative research and qualitative research have been presented to the ascendant strategy for managing business research. (Bryman and Bell, 2003) The use of interview is a typical data collection tool to qualitative research approach, was help me to receive my direct materials from my adopted investigate firms. However, this method has its own drawbacks include the expensive expenses and time-consuming. Especially if there are a large amount of data is needed to receive from the managers. By myself, I choose the telephone-interview to offset the drawbacks of direct interview to firm’s manager. Through telephone-interview to a manager of Coca-Cola marketing department, I have got the related multi-aspects of
4
Coca-Cola’s investment impacts in China. This telephone-interview from Coca-Cola talk about how the Chinese investment policies influence Coca-Cola’s investment in China, how the Chinese current investment environment helps Coca-Cola’s developing in China and mostly what kind of detailed impacts the Coca-Cola bottling system created to China. And the most parts of the interrelated detailed data about these topics I talk about with Coca-Cola’s manager above are come from the company’s interior, besides, the minor part of the data are from some secondary data source such as the newspaper “China information” and some speech by Chen Weiqi, the president of Coca-Cola Chinese limited company.
Due to the new policies provided by leader Deng Xiaopin, the Coca-Cola system re-entering into Chinese market in 1979 and this system consist of the Coca-Cola Company and its allied bottlers. The Coca-Cola system had invested $1.1 billion in the local economy and built 28 new bottling plants. Because of the differences between Chinese investment and others’, the Coca-Cola took a fancy to Chinese potential investment environment and invests substantial fund. These funds include 37 relative issues investments, which the total amount was 8.16 billion RMB. Since the Chinese entering of WTO, the global business systems like Coca-Cola may help stimulate economic growth, employment and tax revenue, even more the technology transfer. The number of people directly and indirectly employed by Coca-Cola system is estimated to have been 414,000. To the Chinese government tax revenue, Coca-Cola contributed almost 387 million RMB in 1998.
“Questionnaire surveys allow the collection of a large amount of data from a sizeable population in a highly economical way”. (Saunders et. al., 2003:92) Researchers use questionnaire to gain the information that they need, it is a tool that could under the control in the process. Considering the transnational enterprises entered into China,
5