Chinese companies are slow to expand their operations on a global scale, with such companies accounting for only 2.4% of global FDI during June, according to data from FDI markets. The US remains by far the leading source country for FDI, with US companies accounting for 40% of all FDI projects during June.
So far this year, FDI by Chinese companies ranked a mere 13th, with the US, UK and Germany ranking as the top three countries for source FDI. Although Chinese companies contributed only nominally for source FDI, they were the second-highest destination for FDI, with the US ranking first.
No African countries rank in the top 20 for either source FDI or destination FDI for the first half of 2011, showing that the current political unease on the continent is affecting investor decisions. FDI projects by African companies have declined by 2% in the first half of 2011 compared with the same period of 2010. This is the reverse of the overall global trend, which shows FDI rising steadily by 5% so far during 2011 in comparison with the same period of 2010.
United Arab Emirates is the only country in the Middle East that ranks in the top 20 for source FDI, with companies based there investing in 87 FDI projects globally so far in 2011.
Although companies based in developing countries are slow to establish foreign greenfield operations, there may be several reasons to explain the phenomena. For instance, they may feel that there are more opportunities in their home country to exploit than in more developed nations or they may feel they don’t have the resources or know how. However, in the longer term, it is expected that companies from developing countries will start to expand globally at a faster rate.