The Factors of Chinese Direct Investment in Mongolia
Today, with the development of economic integration in the world, regional economic is developing rapidly.
The European Union, the North American free trade area, ASEAN Trade Union and a series of economic union make the regional economic prosperity. But the development of economic free trade zone in the Northeast is lagging behind others.The GDP of the Northeast accounted for about 1 / 5 in the world, more than 70% in Asia. China, Japan and South Korea are relatively lack of resource, so they need to import large quantities of resources. Russia and Mongolia is a sparsely populated and resource-rich country, and the economic is increasing, so there is great potential for development.This paper analyzes the China-Mongolia trade, which is the weak link in the Northeast Economic, and puts emphasis on the characteristics and problems that Chinese enterprises invest directly in Mongolia. The author proposes how to expand the china and Mongolian trade and increase investment of Chinese enterprises in Mongolia, in order to make up for both disadvantages.China and Mongolia has 4,710 kilometers of common borders, so they have huge potential to develop economic. According to the Mongolian side statistics, as of the end of 2007, China invested a total of 11.81 billion U.S. dollars and 3,769 projects in Mongolia, accounting for 51.3% of the foreign investors’total direct investment in Mongolia and 48.5% of the total number of foreign-funded enterprises. So china remains the largest investment country in Mongolia. The paper starts from the Chinese direct investment in Mongolia, analysis the existing problems of China’s direct investment in Mongolia from the view of economic position and foreign direct investment. Then the author put forward policy recommendations.Based on the difference of the research contents, the research methods of this paper are the literature analysis, historical analysis, SWOT analysis and quantitative analysis.First of all, the paper introduces the reasons of choosing this topic, the purpose of the study, the related references, the main research contents and methods. Also gives a brief overview of the difficulties and innovation in this paper.Second, this paper introduces the theoretical foundation, which is the theory of the economic location and foreign direct investment. First the paper describes the theory of economic location and cites factors that affect the economic position. Then the paper introduces the foreign direct theory in the developed countries, developing countries and China.Third, the paper analyzes the Status quo and impact of China’s direct investment in Mongolia. China’s direct investments have strong stimulating effect both to the GDP in Mongolia and the trade volume between China and Mongolia.Fourth, the paper introduces the economic location and diplomatic situation in Mongolian, analyzes Chinese enterprises in the case of Mongolia, and the effects that the domestic environment and balancing relations impact on Chinese enterprises. Since Mongolia is in economic transition, the laws and regulations often change,the investors felt in risk;Historical distrust concept is the important aspects that hinder the development of Chinese enterprises. Mongolian has same language culture with Inner Mongolia in China, which are the natural advantages to Chinese enterprises. In use of the method of literature analysis, the paper analyzes the advantages factors to Chinese enterprises investment in Mongolian.Through analyzing the direct investment of enterprises in our country, there have some problems. Industry is too focused in distribution; lack of information about Mongolian, the enterprises enters into Mongolian market blindly; due to the low level of business management, the enterprise is operating efficiency; our country are lack of overall planning to investment in Mongolia, and weaknesses of country system. Last, the author analyzes the advantage and disadvantage of our country with the method of SWOT analysis.Finally, the author put forward countermeasures and opinions in order to promote china and Mongolian trade development more healthily and stably. Form two sides, the government and enterprises, the author put forward recommendations.Recommendations on the government level: the government should attach importance to the communication with the high-level in Mongolia, in order to increase mutual trust; establish a free trade area, to promote tourism cooperation between China and Mongolia and to increase our understanding of the people of Mongolia; increase the assistance to Mongolia Infrastructure; strengthen the cultural ties between the two countries; set up the information website about Mongolia, in order to provide for the enterprises promptly; regulate actions that damage our country’s interests; guide enterprises to invest, avoid too concentrated, the enterprises should enter into the Mongolia market rationality.Recommendations on the Chinese enterprises that invest in Mongolia: the state-owned enterprises invested in Mongolia, should invest diversify; in the early development, the enterprises can choose to joint venture, in order to reduce the investment risk; The private enterprises should seize the opportunity, to invest in Mongolia timely; the state-owned enterprises should reform, in order to establish modern enterprise system early; the enterprise should strengthen management, to develop their competitiveness.
The European Union, the North American free trade area, ASEAN Trade Union and a series of economic union make the regional economic prosperity. But the development of economic free trade zone in the Northeast is lagging behind others.The GDP of the Northeast accounted for about 1 / 5 in the world, more than 70% in Asia. China, Japan and South Korea are relatively lack of resource, so they need to import large quantities of resources. Russia and Mongolia is a sparsely populated and resource-rich country, and the economic is increasing, so there is great potential for development.This paper analyzes the China-Mongolia trade, which is the weak link in the Northeast Economic, and puts emphasis on the characteristics and problems that Chinese enterprises invest directly in Mongolia. The author proposes how to expand the china and Mongolian trade and increase investment of Chinese enterprises in Mongolia, in order to make up for both disadvantages.China and Mongolia has 4,710 kilometers of common borders, so they have huge potential to develop economic. According to the Mongolian side statistics, as of the end of 2007, China invested a total of 11.81 billion U.S. dollars and 3,769 projects in Mongolia, accounting for 51.3% of the foreign investors’total direct investment in Mongolia and 48.5% of the total number of foreign-funded enterprises. So china remains the largest investment country in Mongolia. The paper starts from the Chinese direct investment in Mongolia, analysis the existing problems of China’s direct investment in Mongolia from the view of economic position and foreign direct investment. Then the author put forward policy recommendations.Based on the difference of the research contents, the research methods of this paper are the literature analysis, historical analysis, SWOT analysis and quantitative analysis.First of all, the paper introduces the reasons of choosing this topic, the purpose of the study, the related references, the main research contents and methods. Also gives a brief overview of the difficulties and innovation in this paper.Second, this paper introduces the theoretical foundation, which is the theory of the economic location and foreign direct investment. First the paper describes the theory of economic location and cites factors that affect the economic position. Then the paper introduces the foreign direct theory in the developed countries, developing countries and China.Third, the paper analyzes the Status quo and impact of China’s direct investment in Mongolia. China’s direct investments have strong stimulating effect both to the GDP in Mongolia and the trade volume between China and Mongolia.Fourth, the paper introduces the economic location and diplomatic situation in Mongolian, analyzes Chinese enterprises in the case of Mongolia, and the effects that the domestic environment and balancing relations impact on Chinese enterprises. Since Mongolia is in economic transition, the laws and regulations often change,the investors felt in risk;Historical distrust concept is the important aspects that hinder the development of Chinese enterprises. Mongolian has same language culture with Inner Mongolia in China, which are the natural advantages to Chinese enterprises. In use of the method of literature analysis, the paper analyzes the advantages factors to Chinese enterprises investment in Mongolian.Through analyzing the direct investment of enterprises in our country, there have some problems. Industry is too focused in distribution; lack of information about Mongolian, the enterprises enters into Mongolian market blindly; due to the low level of business management, the enterprise is operating efficiency; our country are lack of overall planning to investment in Mongolia, and weaknesses of country system. Last, the author analyzes the advantage and disadvantage of our country with the method of SWOT analysis.Finally, the author put forward countermeasures and opinions in order to promote china and Mongolian trade development more healthily and stably. Form two sides, the government and enterprises, the author put forward recommendations.Recommendations on the government level: the government should attach importance to the communication with the high-level in Mongolia, in order to increase mutual trust; establish a free trade area, to promote tourism cooperation between China and Mongolia and to increase our understanding of the people of Mongolia; increase the assistance to Mongolia Infrastructure; strengthen the cultural ties between the two countries; set up the information website about Mongolia, in order to provide for the enterprises promptly; regulate actions that damage our country’s interests; guide enterprises to invest, avoid too concentrated, the enterprises should enter into the Mongolia market rationality.Recommendations on the Chinese enterprises that invest in Mongolia: the state-owned enterprises invested in Mongolia, should invest diversify; in the early development, the enterprises can choose to joint venture, in order to reduce the investment risk; The private enterprises should seize the opportunity, to invest in Mongolia timely; the state-owned enterprises should reform, in order to establish modern enterprise system early; the enterprise should strengthen management, to develop their competitiveness.
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