Research On The Motivation Of Chinese OFDI In The European Union

For many years China was major recipient of FDI, an important destination for foreign companies that were in search for lower production costs and new markets for their products. This trend in Chinese economy has led to capital accumulation that allowed the country to take up new policies that have even further increased the degree of openness and development. WTO accession marked the beginning of the "go global" policy, which was also a turning point for Chinese economy, as China became a global player on the world stage.For China EU is relatively stable and open region, which can provide Chinese companies with a wide range of opportunities that other countries or regions do not have. Nevertheless recent years European Union experienced sovereign debt and financial crisis, Chinese investment in the region has been increasing considerably. Furthermore, two enlargements of the European Union in 2004 and 2007 increased investment opportunities in the EU, as now investors have easier access to common market and also have a chance to use the diversified advantages of each EU member. But nowadays European Union still only accounts for 6% of Chinese accumulated investment in average. If to compare this figure to annually growing bilateral trade between China and EU, it’s evident that FDI cooperation is still left far behind and has a big room for development. As China-EU investment cooperation obviously has a great significance and bright future, the analysis of investment driving factors has become indispensable. The author being student from European country, should seize an opportunity to analyse the phenomenon of Chinese FDI to the EU from both angle of China and host country.Nowadays Chinese FDI are mostly aimed to increase global competitiveness of the investing companies through the seeking of new markets, searching for natural resources, access to host country strategic assets, like technology and know-how and other new possibilities of development. This paper mainly basing on Dunning eclectic paradigm, analysed driving factors for Chinese direct investment in the EU, and compared investment motivation in old and new members of the European union. The paper is organized as follows:The first chapter, Introduction, presents origins of the research topic, main concepts as well as innovation and deficiencies of the thesis. The second chapter sums up classic and modern direct investment theories along with empirical researches related to the study of Chinese direct investment motivation. The third chapter analyzes the current situation of Chinese FDI in the EU, including direct investment flows and stocks analysis, as well as country and industry distribution of Chinese FDI in Europe. The fourth chapter uses econometric model to explore the direct investment motives of China in the European Union, it analyzes respectively the motivation of Chinese direct investment into new and old EU member states, and finally compares the investment motives. In the fifth chapter the paper discusses the opportunities and challenges that Chinese FDI face in the EU, highlights the role of Chinese FDI in the economic and trade cooperation between China and European Union, and basing on the theoretical, empirical and other kind of analytical results puts forward a series of countermeasures recommended to Chinese enterprises, the Chinese government and the European Union government to the develop and strengthen mutual investment cooperation.