The Foreign Investment Environment in China: The Soft Environment (I)

Abstract

Compared with the hard environment for FDI, the soft environment is much more difficult to evaluate because it comprises a wide range of intangible factors. These factors are examined in detail in this and the next chapter. Since the opening up in 1978/79, China’s soft environment has been particularly affected by problems such as insufficient foreign exchange facilities, inadequate legal frameworks, different labour relations, shortage of qualified managerial staff, the natural expectation of workers for a wide range of social services and welfare and high levels of job security, and the commonplace bureaucratism and corruption in local and central governments and their agencies. To a large extent, these problems have been derived from the unique historical, political, economic and social systems in China, and many of these problems are closely related to China’s transition from planning to market.