FOREIGN DIRECT INVESTMENT OF SWEDISH FIRMS TO THE CHINESE MARKET
Market sizeForeign Direct InvetsmentsProduction costsGovernmental regulationsManagement of enterprisesFöretagsledningManagementBusiness and Economics
Since the Chinese economy?s reform in 1980, it has been attracting enormous foreign investments. Many Swedish firms from different sectors such as technology, manufactory production, consumer, service industries and so on, had started their investments in China. China has become the first choice for global manufacturing due to the huge market, continuous economic growth, stable political situation, sound investment environment and the WTO membership. In addition, China's enormous potential in finance, service, infrastructure, telecommunications, wholesales and retail industries will also attract a great deal of foreign capital. In this paper, we will examine factors that have influenced the Swedish firms? decision making of investments in China. Factors include ownership, location, internalization advantages, resources, human capital and so on. Additionally, we will find out what the latest influential factors and changing attitudes are. Our case study is Ericsson, the Swedish telecommunications giant, which?s relationship with China dates back to 1892. We analyze this multinational enterprises? investment history and the motivations during its fast growth and expansion period in 1990s, and the changed strategies when it went downhill in the beginning of 2000. Today, it is one of the major players in telecommunication industry in China.Opportunities and threats exist at the same time. While Swedish firms have enjoying benefits from investments; they also have many difficulties in terms of regulations, limited access to certain industry, government?s requirements of technology transfer etc, and we will discuss the problems vertically in each industry and horizontally cross all sectors. China?s WTO accession has brought more attractions because of an ever-growing number of sectors that are opening up to foreign investors. The Chinese government will carry out its commitments to grant greater access in relevant areas step by step and to reduce or abolish tariffs. However, the competitions is getting server from domestic substitutes and international competitors. Swedish investors still keep their enthusiasms and believe that investments in China are beneficial in the long term.