Russia vs. China: FDI Analysis for Energy Company

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Introduction

A company that is considering investing internationally has to evaluate some important factors that are crucial in choosing the right country. In order to choose the best decision a businessperson has to analyze economic, political, geographical and social factors before entering a new market. This paper will analyze two countries using a fictive sample of Energy Company based in US. This private company wants to enter to a new market in one of the BRIC countries located in Europe or Asia. The energy company wants to build ECO power plants (environmental friendly) and introduce a new concept of sustainable energy source to these two countries (Russia and China). Hydropower, Wind power and solar energy should be used to generate the electricity. The capital investment is quite high in order to build new power plants, but the goal of the company is to become a big competition for already existing companies in this industry. The major advantage of this energy company is that they produce electricity for a fair price and do not pollute the environment. The company wants to build a chain of ECO power plants in one of these countries and expand to other markets outside the US.

Social risks and benefits

Russia and China are countries with large population. These states belong to BRIC group, which are countries with fast developing economy. Both are very attractive destinations for foreign direct investments that can benefit whole country. Despite of the prosperity a huge amount of the population live below the poverty line and lack basic needs or education. The average wages in these countries are very unstable because they vary from region to region. While average wages in China are rising those in Russia are ...

... middle of paper ...

.... The World Factbook. Retrieved November 24, 2013, from https://www.cia.gov/library/publications/the-world-factbook/geos/ch.html Central Intelligence Agency (2013). The World Factbook. Retrieved November 24, 2013, from https://www.cia.gov/library/publications/the-world-factbook/geos/rs.html

Graham, E. M., Wada, E. (2001). Foreign Direct Investment in China: Effects on Growth and Economic Performance. Retrieved November 24, 2013, from Peterson Institute for International Economics website: http://www.iie.com/publications/wp/01-3.pdf

The World Bank (2013). Doing Business in China - World Bank Group. Retrieved November 24, 2013, from http://www.doingbusiness.org/data/exploreeconomies/china/

The World Bank (2013). Doing Business in Russian Federation - World Bank Group. Retrieved November 24, 2013, from http://www.doingbusiness.org/data/exploreecon omies/Russia

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