An Overview On Foreign Direct Investment

1783 Words Sep 27th, 2015 8 Pages
Foreign Direct Investment is the direct investment in new facilities or companies to expand a business in a new country. In evaluating and analyzing East Asia, it is important to focus on cultural issues as they are major indicators of the business environment and implementation in a given local. East Asia, including China, only began opening up for foreign investment in the 1970s. Japan is considered a developing market, where the rest of Eastern Asia is an emerging market, the majority of FDI around the world is targeted to developing nations due to increased stability, consumer culture, and large markets. The risk of emerging markets is greater than in developed, thus yielding a greater return on investment when the endeavor succeeds. Cultural issues that may arise and should be considered prior to investing FDI in Eastern Asia include the focus on long-term planning, results oriented, and collectivism culture which may delay the implementation of FDI and action in this area of the world. With a high level of advocacy for local partnerships, a hierarchical corporate structure, and masculine dimension, foreign companies must analyze and determine if such cultural differences can be incorporated.
Once investment becomes operational in East Asia some of the same cultural aspects that should be analyzed initially do arise again, but also additional cultural differences as well. The core basis of business in East Asia is to exist for more than to simply increase shareholders’…

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