International Business Environment

Introduction Foreign direct investment (FDI) is a direct investment made by a company or entity into production or service in another country. According to UNCTAD (2010), foreign investment can lead to the transfer of soft skills, and can introduce more advanced technology and resources to the host countries. As governments, attracting more FDI is crucial to boost development of economy. Recently, China has a rapid development of FDI, and its outcomes are astonishing. This essay firstly put an overview about the situation of FDI in China and the reasons for its growth in FDI. In the meantime, some uncertainties and problems brought by FDI are exposed and needed to be solved. Thus, Chinese government takes some steps to improve the environment of investment. Then, using China‟s experience and weaknesses for reference, this essay trying to figure out what governments act to help attracting the social responsible FDI. Meanwhile, achieving harmony with profit, environment and society which is called triple bottom line is a key factor concerned by the host governments and foreign companies both. Overview of FDI in China From the late 1970s, China began to adopt the economic reform and opening-up policy, which brings dramatic and rapid growth on economy. Increasingly opening to the rest of the world also brings China significant growth on foreign direct investment. In the past few years, there is a huge increase on the FDI. Even though the FDI in and from Asian countries showed a downward trend on growth momentum, according to the World Investment Report for 2013 (UNCTAD, 2013), China and Hong Kong (China) occupied the second and third largest FDI recipients in the world after the United States. And from the FDI overview of China in the World Investment Report 2009 (UNCTAD, 2009), nearly 20 years from 1990 to 2008, the inflow of FDI stock grew from $21billion in 1990 to 378 billion in 2007, which illustrates that FDI has been an indispensable source of economic growth in...