AN ANALYSIS OF SINGAPORE INVESTMENTS IN THE PEOPLE'S REPUBLIC OF CHINA

Abstract

Acknowledging the People's Republic of China as an increasingly major recipient of Singapore's industrial activities, this study analyses data on foreign direct investment (FDI) made by Singapore firms in the mainland, and it attempts to explain differences and similarities between investment trends in the 1990s with that almost a decade ago. It also applies FDI theories, which were developed for explaining advanced country corporations, to those from a less developed country such as Singapore. Several aspects of the business ventures in China are examined, including the industry concentration, diversification (of corporate operations), locations, involvement patterns, project contributions, project gross values and export-orientation. The findings are generally consistent with those from previous theoretical and empirical studies, and suggest that although most Singapore companies are there to exploit their technical skills and to make a profit, they also possess ownership advantages over foreign competitors (especially those from the Western countries) in terms of their familiarity of the local market, 'guanxi’ relations, and close family and ethnic ties with the Chinese business community and central authorities.