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Essay / Russia vs. China: FDI Analysis for an Energy Company
IntroductionA company planning to invest internationally must evaluate some important factors that are crucial in choosing the right country. In order to choose the best decision, a businessman must analyze economic, political, geographical and social factors before entering a new market. This article will analyze two countries using a fictitious sample of US-based energy companies. This private company wants to enter a new market in one of the BRIC countries located in Europe or Asia. The energy company wants to build ECO (environmentally friendly) power plants and introduce a new concept of sustainable energy source in these two countries (Russia and China). Hydropower, wind power and solar power must be used to generate electricity. The capital investment is quite high to build new power plants, but the company's goal is to become a big competitor for already existing companies in this sector. The main advantage of this energy company is that it produces electricity at a fair price and does not pollute the environment. The company wants to build a chain of ECO power plants in one of these countries and expand to other markets outside the United States. Social risks and benefits Russia and China are countries with large populations. These states belong to the BRIC group, which are countries with rapid economic development. Both are very attractive destinations for foreign direct investment which can benefit the entire country. Despite prosperity, a large part of the population lives below the poverty line and lacks basic needs or education. Average salaries in these countries are very unstable as they vary from region to region. While average wages in China are rising, those in Russia are... middle of paper ....... The World Factbook. Accessed November 24, 2013, from https://www.cia.gov/library/publications/the-world-factbook/geos/ch.html Central Intelligence Agency (2013). The World Factbook. Accessed November 24, 2013, from https://www.cia.gov/library/publications/the-world-factbook/geos/rs.htmlGraham, EM, Wada, E. (2001). Foreign direct investment in China: effects on growth and economic performance. Retrieved November 24, 2013, from the Peterson Institute for International Economics website: http://www.iie.com/publications/wp/01-3.pdf World Bank (2013). Doing Business in China - World Bank Group. Retrieved November 24, 2013 from http://www.doingbusiness.org/data/exploreeconomies/china/The World Bank (2013). Doing Business in the Russian Federation - World Bank Group. Retrieved November 24, 2013 from http://www.doingbusiness.org/data/exploreecon omies/Russia