China Tops Europe as the Most Attractive FDI Market
China (39%) was ranked the most attractive foreign direct investment (FDI) destination for 2010, edging ahead of Western Europe (38%), in an Ernst and Young (E&Y) latest survey of 814 companies.
Going forward, E&Y sees a clear shift in the World’s economic weight eastwards, as they rank China (66%), India (61%) and Central & Eastern Europe (59%) as the most attractive regions for FDI projects in the next three years.
Western Europe, which currently ranks as the second-most popular destination for FDI, is expected to fall to fifth place behind Brazil in E&Y’s future attractiveness rating.
The report stated that in the improved economic scenario, investors have resumed their hunt for higher returns, leading to global FDI competition. This has resulted in a leveling of the playing field.
Both East and West Europe have been hit badly by the economic crisis, which has raised doubts about the region continuing to play a leading role in a multi-polar world if it is unable to attract new investments, the report added.
“In 2010, investors look at a forecast global growth of 4%, see that only 1% is likely in Europe and turn their eyes to high-growth markets,” said the authors of the report.
China is a key growth area for European firms such as Siemens AG and Peugeot.
The global financial meltdown has pushed the world economy into recession. In 2009, foreign investment around the world dipped 40%. Europe saw a 11% decline in new FDI projects in 2009 with just 3,303 deals registered. But in China, it dropped only 2.6%, to $90 billion.
In the first quarter of 2010, FDI in China grew 7.7% year over year to $23.44 billion. A total of 5,459 overseas-funded ventures were established, up 19.9 % from the corresponding period last year.
A report from the American Chamber of Commerce in China shows that nearly 80% of US firms in China plan to increase their investment in the country. And nearly half are expecting their investment growth, to reach more than 10%.
At the same time, a report named “2010 Global Manufacturing Competitive Index” issued by Deloitte and US Council on June 23rd shows that China scored ranked first in both current competitiveness and competitiveness in the next five years, followed by India. The epicenter for manufacturing continues to shift to emerging markets and especially China.
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