The Foreign direct investment (FDI) is quite welcome for the developing countries such as China. The reason is because of the FDI encourage the local economic and create more working opportunity for the local residents. However, it is not always good for the local economic, because of the strong competitive multinational company might also become a threat to the local industry.
The recent argument about wether the India should choice FDI in retail chain brings public notice. The reason is the India government trying to reform its FDI plan in India’s retail chain. The reason for the government to reform the economic might from several reason. Firstly, the repaid decline in FDI in India, FT (2011) has point out that the overseas investment decrease annually to $14bn for the first eight months of the fiscal year. Additionally, the messy current situation in India’s retail sector, the low efficiency and decelerating annual growth in domestic product (BBC, 2011). Thirdly, it will provide millions of new jobs.
However, this was resist by some small shopkeeper, they believes this will destroy their benefit event led them lose their job. This is because it is difficult for them to competitive with the supermarket giant like Tesco and Wal-mart. Furthermore, this also worried by the local farmers, because of the multinational companies might squeeze out their profit by drive down their price. Nevertheless, this has been argued that introduce the large companies will not reduce the local supplier’s profit and on the other hand, it will brings more benefits to customer and supplier by reducing the retail chain and improving the market efficiency.
Overall, from my point view, I strongly agreed with the opinion that it is time for India to introduce FDI. This is not only because of the huge benefit that the FDI will bring for the countries but also it is a global trends. The reason for me to suggest this opinion that although FDI will increase the market competition in India and left small market share for the local business. However, the competition will also bring the efficiency to the countries. What is more, the India government really want from FDI is to improve the current situation in the retail sector-- too much wholesale trader and small retailers not only low down the market efficiency and the lack of adequate cold storage and refrigeration in deliver chain. This will boost up the economic in India. As it is general knowing, china was a successful example for FDI. From the Bloomberg (2011) it states that the FDI in China in 2010 has reach to $105.7 billion (17.4% increased from last year). The huge inflow invest boosted up the economic in China as in 2010 it surpassed Japan becomes the second-biggest economy in 2010 (Bloomberg, 2011). According to the case of China’s FDI, it could be found that the FDI will boost up the country’s economic and brings more benefits than drawbacks.
However, some arguments about the multi-national company will be too power to be a threaten to government. This warns the government although it will brings lots of good for the country, the well regulation still need to be complete in order to achieve the original goal of the country. In other words, for india, it need to well monitor the FDI and apply the adequate regulation to control it develop towards the mutual benefits.
No comments:
Post a Comment