A survey on Singapore's investments in China : characteristics & trends

• Main Authors: Bee, Chee Wee, Foo, Toon Ee, Lim, Yeow Eng
• Other Authors: Nanyang Business School
• Format: Final Year Project
• Language: English
• Published: 2014
• Subjects: DRNTU::Business
• Online Access: http://hdl.handle.net/10356/58594
• Institution: Nanyang Technological University

After a thorough study by our group on the characteristics and trends of Singapore investments in China, it was observed that majority of the firms that invested in China were not listed and were in fact Small and Medium Enterprises (SMEs). These SMEs mostly invested in the form of joint ventures. Majority of the investors have manufacturing as their principal activities domestically. In their investments in China, they did not diversify into new sectors. Even for subsequent projects, these investors chose to stay in their familiar sectors. A general trend was observed in the provinces where investors chose to invest in. They have begun to move deeper into inner China instead of restricting themselves to the coastal provinces as were traditionally the case. Favourite provinces for investments included Jiangsu, Guangdong, Fujian, Beijing, Shandong and Sichuan. Our survey also revealed that there was little or no displacement effects arising from the increasing number of investments in China. Singaporean investors felt that these investments were beneficial to both Singapore and China in their own ways. To Singapore or ASEAN, they represented a new and growing market which offered new business opportunities with possible higher rates of return. To China itself, they represented transfer of much needed technology and expertise which played an essential role in stimulating the economic growth of China and providing job opportunities. The reasons that were most often cited for investing in China were the large domestic market of China, the possible strategic alliance and the lower operating costs. The infamous bureaucracy, its poor infrastructure and the insufficiency of skilled management remained the major stumbling blocks to foreign investments for China. To encourage more foreign investments, China needs to improve, if not solve, these problems. If the present wave of investment flow to China continued, it is highly possible that in time to come, Singapore will become one of the top three foreign investors in China.