What are some of the reasons firms engage in FDI?
Foreign direct investment is the net inflows of investment to acquire a lasting management interest (10 percent or more of voting stock) in an enterprise operating in an economy other than that of the investor. It is the sum of equity capital, reinvestment of earnings, other long-term capital, and short-term capital as shown in the balance of payments. Along with the trade liberalization and globalization, there are more and more enterprises engage in FDI to seek certain benefits. This essay is to elaborate on four main reasons.
Firstly, most international corporations establish plants or distribution networks abroad to take advantage of lower labor costs. Most developing countries have abundant labor resources with much lower prices in comparison with the labor market in developed countries. For example, since the price of labor in China has not been as cheap as in the past anymore, many manufacturers have moved their factories to some Southeast Asian countries such as Vietnam. According to a calculation, on average each month, Samsung only pays for a Vietnamese female worker including wages and overtime at about 353 USD. This figure is only 1/10 of the salary of a worker in Korea.
Secondly, multinational enterprises also aim to reduce logistics costs when seeking for a suitable location to set up their distribution systems or plants. For instance, by producing cars in the UK, Nissan can lower transport costs when selling to the UK market for up to 30%.
Thirdly, foreign investors can also benefit from investment incentives such as cash grants, tax credit, accelerated depreciation, and low interest-bearing loans which are sponsored by national or local authorities. For example, if in Korea, Samsung has to pay a 22% tax every year, then when coming to Vietnam, Samsung does not have to pay a penny for 4 consecutive years for the so-called corporate income tax.
And finally, direct investment in foreign markets provides companies with opportunities for using local knowledge to help tap into domestic markets. For example, by investing in a foreign country and working with local workers, a multinational can gain a better insight into what works well for local markets.
In conclusion, because of the above benefits, FDI is an indispensable investment trend in this era for multinational companies to expand markets and prolong the life cycle of products.
| Post date | Users | Rates | Link to Content |
|---|---|---|---|
| 2024-07-09 | MEBC Class | 80 | view |
| 2024-06-23 | Trần Ánh Vy | 89 | view |
| 2024-03-07 | tata | 78 | view |
| 2024-03-06 | tata | 56 | view |
| 2024-03-06 | tata | 56 | view |
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Grammar and spelling errors:
Line 5, column 13, Rule ID: WHITESPACE_RULE
Message: Possible typo: you repeated a whitespace
Suggestion:
...lled corporate income tax. And finally, direct investment in foreign markets pro...
^^
Transition Words or Phrases used:
also, but, finally, first, firstly, if, second, secondly, so, then, third, thirdly, well, as to, for example, for instance, in conclusion, such as
Attributes: Values AverageValues Percentages(Values/AverageValues)% => Comments
Performance on Part of Speech:
To be verbs : 8.0 13.1623246493 61% => OK
Auxiliary verbs: 3.0 7.85571142285 38% => OK
Conjunction : 12.0 10.4138276553 115% => OK
Relative clauses : 5.0 7.30460921844 68% => More relative clauses wanted.
Pronoun: 7.0 24.0651302605 29% => OK
Preposition: 62.0 41.998997996 148% => OK
Nominalization: 16.0 8.3376753507 192% => OK
Performance on vocabulary words:
No of characters: 2013.0 1615.20841683 125% => OK
No of words: 383.0 315.596192385 121% => OK
Chars per words: 5.25587467363 5.12529762239 103% => OK
Fourth root words length: 4.42384287591 4.20363070211 105% => OK
Word Length SD: 3.04564462175 2.80592935109 109% => OK
Unique words: 228.0 176.041082164 130% => OK
Unique words percentage: 0.595300261097 0.561755894193 106% => OK
syllable_count: 632.7 506.74238477 125% => OK
avg_syllables_per_word: 1.7 1.60771543086 106% => OK
A sentence (or a clause, phrase) starts by:
Pronoun: 3.0 5.43587174349 55% => OK
Article: 1.0 2.52805611222 40% => OK
Subordination: 3.0 2.10420841683 143% => OK
Conjunction: 3.0 0.809619238477 371% => Less conjunction wanted as sentence beginning.
Preposition: 8.0 4.76152304609 168% => OK
Performance on sentences:
How many sentences: 16.0 16.0721442886 100% => OK
Sentence length: 23.0 20.2975951904 113% => OK
Sentence length SD: 45.258243379 49.4020404114 92% => OK
Chars per sentence: 125.8125 106.682146367 118% => OK
Words per sentence: 23.9375 20.7667163134 115% => OK
Discourse Markers: 9.125 7.06120827912 129% => OK
Paragraphs: 6.0 4.38176352705 137% => Less paragraphs wanted.
Language errors: 1.0 5.01903807615 20% => OK
Sentences with positive sentiment : 6.0 8.67935871743 69% => OK
Sentences with negative sentiment : 4.0 3.9879759519 100% => OK
Sentences with neutral sentiment: 6.0 3.4128256513 176% => OK
What are sentences with positive/Negative/neutral sentiment?
Coherence and Cohesion:
Essay topic to essay body coherence: 0.0493526989275 0.244688304435 20% => The similarity between the topic and the content is low.
Sentence topic coherence: 0.0161302445882 0.084324248473 19% => Sentence topic similarity is low.
Sentence topic coherence SD: 0.0323444043122 0.0667982634062 48% => Sentences are similar to each other.
Paragraph topic coherence: 0.024870891853 0.151304729494 16% => Maybe some paragraphs are off the topic.
Paragraph topic coherence SD: 0.0208319504268 0.056905535591 37% => Paragraphs are similar to each other. Some content may get duplicated or it is not exactly right on the topic.
Essay readability:
automated_readability_index: 15.3 13.0946893788 117% => OK
flesch_reading_ease: 39.67 50.2224549098 79% => OK
smog_index: 8.8 7.44779559118 118% => OK
flesch_kincaid_grade: 13.4 11.3001002004 119% => OK
coleman_liau_index: 13.52 12.4159519038 109% => OK
dale_chall_readability_score: 9.72 8.58950901804 113% => OK
difficult_words: 120.0 78.4519038076 153% => OK
linsear_write_formula: 12.0 9.78957915832 123% => OK
gunning_fog: 11.2 10.1190380762 111% => OK
text_standard: 12.0 10.7795591182 111% => OK
What are above readability scores?
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Maximum five paragraphs wanted.
It is not exactly right on the topic in the view of e-grader. Maybe there is a wrong essay topic.
Rates: 11.2359550562 out of 100
Scores by essay e-grader: 1.0 Out of 9
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Note: the e-grader does NOT examine the meaning of words and ideas. VIP users will receive further evaluations by advanced module of e-grader and human graders.