Transcript Comparison of FDI in four countries in Asia

Presented by
Krist Boonjunwetvat 5004640487
Peerut Sunirand 5004640750
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Wages
Intellectual property
Requirement for a local partner
Taxes
Domestic market
Bureaucracy
Safety
Environment
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India is the least expensive for unskilled labor, $34 base
salary per month.
While the minimum wage in China, Thailand and
Vietnam outside of the urban area is about $85-90 base
salary per month (approximately $4 per day).
Labor laws in India are also written to attract more
FDI.
Note: Investor needs to concern about government
required benefit and employment benefit as well.
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China continues to have serious problems with IP
protection. Laws do exist but China has conflicts
between its government and private sectors.
India is much stronger on IP protection and has a much
more developed legal system with more predictable
outcomes than China.
Vietnam also continues to have problems with IP
protection similar to China.
Thailand is more unified nationally and has less
conflict between its levels of hierarchy. Although
Thailand has minor problems with IP protection, in
generally is much better than China or Vietnam.
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Often, local officials will encourage you to consider a
local partner and introduce them, but there is no
requirement for local ownership on most investments
in Asia today.
Investing in China or Vietnam today can and do
generally establish a wholly owned subsidiary (a
wholly owned foreign enterprise).
Certain businesses in India are still restricted to Indian
nationals only, but for over 90 plus percent of
businesses they are open to foreign investors and there
is no requirement for a local partner.
Thailand has long not required a local partner.
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Taxes typically are higher in India than in
China.
China generally only offers a two-year
exemption and three years with a 50%
reduction.
In Thailand, the area outside Bangkok and its
suburbs offer eight year exemptions plus five
years at 50% off.
Considering the Value added tax (VAT)
- In china VAT is 17%, while India is 12.5%,
Vietnam is 10-mid 20s%, and Thailand is only
7%.
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China and India, in statistical, have a high number of
population but less consumption.
On the contrast, Thailand, which is smaller relative to
those countries, has a high number of consumption
because Thailand activate domestic market by FTA
with many counties, such as India, China, Australia
and New Zealand.
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There are safety rules in China, Vietnam and elsewhere
but enforcement tends to be below standard.
Workman's Compensation laws exist and are generally
enforced against foreign companies but less so if at all
against Chinese or Vietnamese owned firms.
India has its own problems with safety as contract
workers are used to circumvent safety.
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Licenses, permits and approvals in China are generally
quickly issued and acted upon, whereas in India, it still can
be very difficult to get a project through on a timely basis.
Thailand is much more business friendly and has a very
easily understood system and quick procedures.
Communications costs which covers 5% of all expenses.
Most countries in SE Asia, with the exception of Vietnam,
have reduced their costs as has China.
Shipping Costs, the cost of shipping from China and
Thailand to be comparable in price, while Vietnam and
India tend to be higher for shipping about $300 or more per
40 foot container.
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China and Vietnam have laws mandating that all firms have
to follow basic EP guidelines. But in practical, These are
most often enforced against new foreign-owned factories
while existing locally owned factories get much less
attention.
India also has distinct problems with pollution but is doing
better than China because it has a freer press and more
active advocacy groups.
Thailand has strict guidelines, especially for water and
chemical usage, but it still has instances of corruption when
it comes to enforcement.
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For any companies seeking to find low-cost quality
suppliers in Asia, China might not be the best alternatives.
Further considering about all aspects or criteria is required
so that investors can evaluate all costs and other factor and
improve performance effectively.
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http://www.business-inasia.com/wire_journal_nov2005.html.