Evaluation of International Investment Location Essay

We atomic number 18 an International railroad car components manufacturing company located in Australia. We atomic number 18 seeking for enthronization opportunities in the automotive sector in attractive international markets. For this purpose our pool has short listed two countries viz. chinawargon and India. This report provides detailed depth psychology of the two countries in terms of the political and economic environments in humanitarian to the competitive factors in the automotive sector. Political factors Political environment in an delivery has a very(prenominal) strong influence on the enthronisation decisions in that country.There are various political factors which affect investment decision such(prenominal) as environmental regulations and protection, tax policies, international great deal regulations and restrictions, contract enforcement law, consumer protection, employment laws, establishment organization and its attitude towards investment, competition regulation, gumshoe regulations etc The following table shows a comparison between the political factors in between the two countries. (The ranking is given by doing employment.org which is a dowery of the World Bank group) Starting a business is relatively easier in India which requires 13 procedures to be eke outd and it takes around a month to complete these procedures. In mainland mainland China there are 14 procedures to be realized to start a new business which require 40 days. relations with construction permits is a difficult process in China. There are 37 processes to be absolute to get the construction permits and it takes around 336 days to complete all those processes.However in India, there are nevertheless 20 processes that need to be end which can be completed in around 224 days. Though employing workers in China is not as ofttimes a difficult affair today as compared to the occurrence in 2008, the condition in India is much better compared to China. Hiring is a very easy affair in India as compared to China however sacking could be much difficult in the Indian environment as compared to the Chinese environment. Registering property in India is a difficult affair as compared to China. speckle China ranks 30th in terms of ease of registering property, Indias rank has dropped down to 114 in 2009 from 105 in 2008. Getting assign in India is relatively easier as compared to China. The doingbusiness. org ranking in the protecting investors class for China is more than double the ranking of India. This indicates that the protection of the interests of the investors is given much more importance in India than in China. The ease with which taxes could be paid in China has been improved a lot in 2009 as compared to 2008.However it has remained unaltered in India. The Chinese government encourages trading crossways borders and hence it is much easier to do international trading in China than in India. Enforcing contracts is a very difficul t affair in India as compared to China. In India there are around 46 procedures to be completed and it takes around 180 days to complete all those procedures however in China there are only34 procedures which can be completed which could be done in a span of 18 days.Closing a business is a difficult affair in India as compared to China. It takes are around 10 years to close down a business in India as compared to a mere 1. 7 years in case of China. Given the rapid transformations in their economies, the Chinese and Indian governments are still trying to determine whether and how to differentiate between house servant and orthogonal trys and what types of policies to adopt for each category of firm.For example, Chinas new enterprise income tax law eliminates the tax advantages that foreign enterprises historically enjoyed over domestic ones, and a new antimonopoly law may put crisp restrictions on acquisitions within China by foreign firms. Meanwhile in India, the government is of ten ruled by a coalition of widely disparate partners, populated by incumbents who almost always lose in the next election Economic instability is another concern. From primeval 2007 to early 2008, manufacturing costs in southern China, where many multinationals have set up shop, have increased by as much as 40 percent.A rapid increase in the cost of raw materials and cleverness as well as new labor laws and environmental regulations are the chief reasons. Indias labor costs have thus furthermost been relatively stable. (Gupta, Wang 2009) Thus there is political risk involved in both the countries. However many consider that the Indias soft attributes, such as a democratic government and a free struggle pose a lesser long term threat than Chinas Hard aspects such as a communist government with a restricted freedom for the press.Both China and India are on the same path of globalization. Both the countries have liberalized their economies and opened the doors of their economies to foreign investments. While China was autarkic in its pre-reform period, India had a highly regulated miserliness with heavy restrictions on the private investments. However, the economic reforms have made China more capitalistic in nature and India has opened up its economy for private investors.