Effective foreign investment in China : utilizing Taiwanese resources

Abstract

It is no doubt that China is expanding its market potential because of its high economic growth and its entry into the World Trade Organizations. This Chinese expansion owes a great deal to foreign direct investment from the US, Europe or Japan. Much of the Japanese investment, in turn, utilizes Taiwanese resources. This paper examines whether, how and why foreign investment in China utilizing Taiwanese resources is effective. This paper is composed chiefly of two parts: the first part addresses the current trends of foreign direct investment in China, the sharp increase of Japanese investments in China utilizing Taiwanese resources, and the pros and cons of these investments, while the second part addresses three case studies to demonstrate the effectiveness of utilizing Taiwanese resources in case of foreign direct investment in China. This paper especially attempts to verify that this effectiveness is not only for Japanese and/or manufacturing but also for Western and/or service industries.