As discussed in the lectures, FDI can be done various ways, such as Greenfield investments, Cross-Border Mergers and Acquisitions (M&A) investments, and finally Brownfield Investment. China’s FDI consists largely of Greenfield investment, while inward FDI in the U.S. by contrast has been generated more by takeovers of existing enterprises rather than develop new establishments. Greenfield investments take place when a company establishes a wholly new operation in a foreign country where as M&A take place when a company purchases an existing business. The article states that, “An estimated $843 billion in capital left China between February and November”. Furthermore, at the start of 2016, Chinese companies have pulled of two major acquisitions in the U.S. General Electric Co. agreed to sell its home-appliances business to Qingdao Haier Co. for $5.4 billion and billionaire Wang Jianlin’s Dalian Wanda Group Co. agreed to spend as much as $3.5 billion to take over the Legendary Entertainment production house (as stated in the article). Both of these are M&A type of FDI rather than Greenfield FDI.
Additionally, we considered two main types of FDI, which are horizontal FDI and vertical FDI. Horizontal FDI happens when the affiliate replicates the p...
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...s FX risk impacts all the businesses that are dealing with GBP/USD currency pair. In order to manage global-specific risks, an MNE should adopt a crisis plan to protect is employees and property and to secure its supply chain integrity. However, the “MNE largely relies on government to protect its citizens and firms from global-specific threats” . In case of global-specific risks, there are no particular financial issues; no MNE has the tools to avert terrorism, anti-globalization, cyber-attacks, poverty etc. However, some of the minor financing issues are caused by the interruption of cross-border supply chain management, financing projects with weaker environmental controls, defending their stand for working with corrupt countries etc.
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