Foreign Investors Slowly Turn their Backs on China

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Nokia is shifting operations from China to Vietnam because sales of the Lumia smartphone have not increased domestically, forcing the company to slash 9,000 jobs. Analysts point to a larger trend of foreign companies turning away from the Chinese.


Nokia is shifting operations from China to Vietnam because sales of the Lumia smartphone have not increased domestically, forcing the company to slash 9,000 jobs. Analysts point to a larger trend of foreign companies turning away from the Chinese.

There are many barriers preventing more investment funds from pouring into China.  One of the primary factors is a lack of growth. There is no doubt that the country has become an economic superpower, but its economy has not grown as fast as economists had hoped. China’s economy has grown at an annual rate of seven percent, and this is still a remarkable feat in its own right. But the recent growth is a far departure from its growth in previous decades. Perhaps the international community is applying a high bar on China, but other problems prevent further investment.

China Tries to Manage Its Pollution Problem

It is no secret that pollution is out of control.  That has put off many companies that are looking to invest abroad. However, China is trying to tackle the issue by reducing coal imports, switching over to alternative energy sources, such as solar, and natural gas. Authorities aim to lower coal usage by 160 million tons in five years. This has already had a negative effect on the North Korean economy, which ships 97 percent of its coal to China.

Chinese Law Restrictions

Other firms view Chinese business laws as confusing and vague, but others believe the regulations are unfair. Many business owners feel as though they are being restricted in certain areas of the economy, especially the service industry. According to a survey, over half of U.S. firms believe that the country’s anti-corruption and monopoly laws unfairly target companies. Moreover, almost half of companies who participated in the survey believe China is less receptive to foreign companies. Information from the survey found that more companies are moving operations out of China for a third straight year.

Emerging Market Competition

Countries such as Vietnam are becoming more attractive to investors because of new market territory in Southeast Asia, and many workers are willing to work for less than Chinese workers. Wages in Vietnam are a third than that of China. Although the country is a top emerging market, Chinese officials must realize that other emerging markets surrounding region are gaining more traction. And since Vietnam looks to China as an economic competitor, the Chinese must do more to foster growth and alleviate investor concerns.

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