Vocabulary

1, Foreign portfolio investment refers to the purchase of shares and long-

term debt obligations from a foreign entity.
FDI FPI
Type Direct investment Indirect investment
Management control High control Very low control
Liquidity High Low
Lead to Transfer of funds, Capital inflows to the
technology, and other foreign country
resources to the foreign
country

2, Three categories that companies are looking for:

 Size of consuming market
 Low transport costs
 Cheap input
3, Example of investment incentives:
 Cash grant
 Tax credit
 Accelerate depreciation
 Low interest-bearing loans
The general aim of investment incentives is to influence the locational
decisions of investors and thus to reap the positive effects of foreign direct
investment
4, A non-exclusive distributor is commonly referred to as a non-exclusive
reseller or non-exclusive agent. This term is used to describe a distributor who is
authorized to sell a product or service, but does not have exclusive rights to do so.
5, It is payment made by a foreign manufacturer to a company that has
licensed the manufacturer to produce its products.
6, A joint venture is a business arrangement in which two or more parties
agree to pool their resources for the purpose of accomplishing a specific task.
 Reading comprehension tasks
1, They normally seek to control or share control over production, research
and development, and sales
2, It is to locating or creating markets for its present and future products
3, They are expected return on an investment, sources of working capital,
interest rates, cash flow projection
4, When reliable access to outside financing is available. A non-viable
project is one where the expected rate of return, or profits realized on assets
employed, is likely to be lower than from a comparable investment in the host
country.
5, They are antitrust legislation and labor laws
6, Because these areas need to attract foreign investment to solve the
problems like low-income or unemployment
7, It will usually engage distributors who receive a commission on products
sold.
8, The drawback of licensing or authorizing foreign distribution is that
manufacturer gives up the control over their product so if licensed product lacks
quality, the exporter’s reputation suffers
9, It is the original manufacturer gives up control over the product so if
licensed product lacks quality, the exporter’s reputation suffers

Exercises
Exercise 1
1, foreign direct investment / foreign portfolio investment
2, net profit
3, assets employed.
4, investment incentive / support foreign investment
5, distributor/ engaged / commission
Exercise 2
1, set up
2, incentives
3, train
4, prosperity
5, attitude
6, dominate
7, bring out
8, investors
9, equity
10, employ
11, levels
Exercise 3
1, subsidiaries
2, affiliates
3, tariffs
4, quotas
5, economic
6, booming
7, joint
8, venture
9, shares
10, returned
11, guidelines
12, legally
13, effective
14, overcapacity
Exercise 4
 Which country should I invest into?
 What are its investment incentives?
 What are the legislations of that country?
 What are the localization advantages of that country?