The Challenges and Opportunities Facing a Foreign Investor Seeking to Invest in China

I Introduction
    Nowadays, more and more foreign investors are attracted to invest in China since the reform and opening-up policy was accepted in 1979. In the process of reform, the promotion of foreign direct investment has been considered as an important task because it can boost the growth of economy. In addition, foreign direct investment plays a vital role in the development of both developed countries and developing countries.
    However, foreign investors face both challenges and opportunities when seeking to invest in China. The essay will analyze the opportunities of China faced by foreign investor by large market size and economy growth, foreign direct investment policies and labour resource and natural resource. Meanwhile, the challenges will be investigated from cultural differences, labour cost and intellectual property rights.

II Opportunities of foreign investment in China
(i) Large market size & Economy growth
    Shapiro (1998) said that finding new market is one of the goals of foreign direct investment. Thus, it is obviously that market size is vital for foreign investment. For the market-oriented foreign direct investment, investors expect to set up factories or enterprises in the Chinese domestic market to manufacture products and services. Therefore, the larger market size and faster economic growth are important factors for them to choose which country should be invested. In addition, large market size and fast economic growth can provide them opportunities to develop their business. (OECD, 2000)
Because of the largest population of China and rapid increasingly consumer spending, many multinational companies have been attracted to invest in China. Meanwhile, Chinese market is considered as the last huge market that has not been exploited in the world. (OECD, 2000) This attracts foreign investors to invest in China due to the enormous potential market. Moreover, the Chinese economic conditions became better and better after the...