Foreign direct investment in Southeast Asia: - Regional Office China

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Foreign direct investment in Southeast Asia: - Regional Office China

Theme 1FDI and Multinational Enterprises in Southeast Asia:Globalisation’s ChallengesPresentation summaryProviding a robust platform on which the topic of FDI in Southeast Asia canbe explored, Peter Buckley provided a ‘long view’ perspective of global andregional FDI activity. He introduced the notion of multinational enterprises(MNEs) as global networks, seeking to “circulate mobile inputs globally, tocombine with locationally fixed factors”. The primary motives for FDI byMNEs can be categorised as seeking to gain: i) market access; ii) access toimmobile inputs, such as raw materials like oil; and iii) access to immobileresources, such as competitive labour inputs and tax rates. The role of MNEsis to circulate mobile inputs across the globe, so as to combine them mosteffectively (and efficiently) with these immobile factors. This results in theformation, co-ordination and movement of various operations and functionswithin an MNE, distributed across countries. And can be likened to that of an‘integrated global factory’. See Figure 1, below.THE INTEGRATED GLOBAL FACTORYDISTRIBUTED OPERATIONS & SPATIALLY COINTERNATIONAL& INTRA-REGIONALBORDERSLow-TechPartsSupplierM ed-TechPartsSupplierCO-ORDINATED FUNCTIONSHi-TechPartsSupplierFTZsDesignEngineeringBrandingM arketingBRANDOWNEREngineeringContractorR&DContractorDesignContractorBPOLow-tech PartsSupplierHi-TechContractAssemblerM ed-TechContractAssemblyOutsourcedParts SupplierM ed-Tech PartsSupplierFinal Assembly,Adaptation,Warehousing,Distribution&LogisticsLOCALMARKETCORE, NON- CORE FUNCTIONSDISTRIBUTED MANUFACTURINGADAPTATIONINTEGRATED TEGRATED INTERNATIONALAL SOURCING, TECHNOLOGY, PRODUCTION, MARKETING& SERVICINGNETWORK OPERATIONSFigure 1: The integrated global factory. Adapted from Buckley (2003); Buckleyand Ghauri (2004).In terms of product classification, and therefore global value (or supply)chains, each MNE may have several global factories, some of which may3PL3PL11

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