A consideration of the kinds of incentives used by different countries and the degree to which these are effective, as well a why they are effective, will lead to an examination of the way incentive have been used by China in particular and how effective China has been in this effort.
FDI is placed in different parts of the world based on how the investor perceives the economic situation in those areas and on possible incentives which countries may use to attract the attention of such investors. Billington (1999) cites a number of key factors which could influence FDI location decisions. Billington cites the role of multinational enterprises (MNEs) in this process, noting that this role has become more important in the emerging global economy, probably because of recent changes which make multi-country markets seem more attractive. One important factor has been the arrival of deregulated markets and the ongoing reduction in international trade barriers, allowing MNEs to compete on more equal terms with foreign rivals. The development of new information technologies has also had two important effect: 1) it makes it possible for consumers to become more aware of the goods that foreign companies have to offer, al