China has widened its lead over the US and other investment destinations worldwide as the most preferred location for foreign direct investment, according to the latest Foreign Direct Investment Confidence Index, based on an annual survey of executives from the world's largest companies
conducted by A.T. Kearney.
Global executives indicated a greater future likelihood to invest in emerging markets than in industrialized countries. For the first time since 1998, a majority of the top 10 destinations most attractive to corporate investors are emerging markets, including China, Mexico, Poland, India, Russia and Brazil.
Four developed markets -- France, Italy, Canada and Australia -- dropped out of the top 10 most attractive FDI destinations this year.
Growth prospects, rising incomes and vast labour pool drive China's appeal
SARS nowithstanding, nearly one-third of respondents to the FDI report have a more positive view of China than one year ago, the largest positive outlook change for any country this year.
While investors report that corruption, bureaucracy and a vulnerable financial sector are troubling, they believe China's advantages outweigh the risks of missing out on the market which is an important catalyst for future Asian and global economic growth.
"Several factors are converging to create a virtuous cycle of offshore investment," said Paul A. Laudicina, A. T. Kearney vice president and managing director of the firm's Global Business Policy Council, which conducts the study.
"Corporations are deploying multi-country strategies to reduce costs, spread risks and ensure business continuity. At the same time, developing economies are making advances in education
and liberalizing their service sectors to attract FDI. "