The Research Of Factors Affecting To Chinese Private Enterprise Entering To Invest In Laos Market

Since China developed and reformed the economy system in 1978, foreign direct investment has become an important part of the China’s economic entities. According to United Nations Conference on Trade and Development (UNCTAD) report,2014 China ranked the first in the world’s largest recipient of foreign direct investment. Anyway, over the past decade, China’s outward direct investment reached a maximum in the history.2013, China’s total outward foreign direct investment also ranked the third in the world as an increase of 80 times in the decade. China’s "going out" strategy, Chinese state-owned enterprises (SOEs), China’s foreign exchange reserve as well as merger and acquisition are the main factors of China investing in foreign markets. Southeast Asia Countries is the key investment hub of China’s outward direct investment, particularly Laos, a member of Association of Southeast Asia Nations (ASEAN) has ranked as the second largest outward investment country of china apart from Singapore in 2013.This thesis will examine the current performance and development prospects of Chinese private enterprises in Laos, as well as analyze the factors effecting Chinese private enterprise to invest in Laos from the result of questionnaires, otherwise, this paper will also provide useful suggestion in investing to Laos. This study investigated 150 Chinese private companies, including:18% of service-oriented enterprises,16% of construction companies, and 12% of hotels and restaurants, the questionnaire is divided into seven major sections:outward investment policy background, business basic information Factors private funds, the state of production management, production and market conditions, investment and overall evaluation. The survey will be using SPSS (Statistical Product and Service Solutions) and EXCEL data processing and analysis.Research shows that the primary demand of Chinese enterprises entering Lao market is raw materials, specifically mining, forestry, and hydroelectric power plants. The government of Laos ought to stabilize the price of raw materials, in order to significantly reduce the cost of Chinese enterprise’s capital and to attract more Chinese investors. Chinese enterprises can smoothly enter to Laos market, depending on the Lao government policy which is the main factor. Administration cost reducing and conductive technology protection of Chinese enterprise could be promoted to Chinese enterprises to take root in Laos, in addition, the Lao government also need to increase human labor training, strengthen the education level, improve the market and financial system, increase the ability of bank’s lending, to ensure all Chinese enterprise business activities in Laos. In the process of Chinese enterprise entering to Laos market of Chinese government, second to the most important thing is to guide and encourage Chinese enterprises. The study also suggest that Chinese government to strengthen the dissemination of foreign investment strategy, and develop more policy to support for small and medium sized enterprises.Beside the government policy, the level of their own enterprises is also one of the restriction factors affecting the Chinese enterprises entering Lao Market. Some of the enterprises are lack of power, and not enough capital to develop and perform their business activities in Laos. To enhance their own strength, they must cultivate all kinds of multinational ability and increase the available capital, this could successfully engage in cross-border business in Laos. Lao local enterprises should also enhance their capabilities and training, and enhance the technical level, develop all kinds of cooperation form, reduce wholly Chinese-owned enterprises, reduce the risk of both sides to promote the distribution of capital and technology within Laos in order to match up with the Chinese enterprise figure.In summary, in order to promote the Chinese enterprise in investing to Laos market, both Chinese and Lao governments and enterprises should join forces, in term of government policy, the Lao government hold the guiding; while in term of enterprises, Chinese enterprises hold the dominant. Chinese enterprises should make closer contact with the Lao government, only the rapport of two sides could be achieved a win-win aspect.