Factors That Drive Investment In China
Big companies are investing in China across the board, which shouldn’t surprise anyone. China is a country that is very much in a stage of rising development. It’s a rising star in the global economy. The companies that are investing there have every reason to believe that their investments are going to be worth more in the future. Choosing an established area for the sake of investment isn’t always the best strategy, since the area might be at its peak now, and there may be a loss of value in the future. It’s better to choose the areas that are on their way up, which has made all the difference when it comes to investment capital in China.
However, this is having an effect on the rest of the world. It is putting more power in the hands of the Chinese economy as more foreign capital is being contributed to Chinese development. The wealthy investors usually only have access to that foreign capital because their own governments impose low taxes on them, which means that potential capital for governments all around the world is going to China instead. The wealthy people in the West tend to follow the money, and they are typically acting out of self interest only.
Skyworks Solutions, Qualcomm, Apple, and many other tech companies and companies that act as suppliers for tech companies disproportionately invest in China and get a lot of their revenue from China. This puts them in a vulnerable position in addition to the effect that it has on foreign economies. If stocks in China go down, the companies that have put lots of their proverbial eggs in that basket are going to lose a lot of money almost immediately. That sort of situation is happening now. Diversity is key when it comes to investment, which is a lesson many companies have forgotten in their rush to jump on the Chinese bandwagon.
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