Foreign direct investment
Maersk’s contribution to China through FDI
Published 21 September 2017 | 1 minute read
Maersk’s involvement in China stands out for its impact on improving connectivity within China through its logistics arm, and between China and the rest of the world through its shipping and logistics activities. Without the experience and international networks of multinational companies like Maersk, making the right connections and leveraging China’s advantages into international markets would be far more difficult.
The Maersk case shows how valuable it has been for China to connect to world markets and how extensive the resulting impact of the foreign companies that facilitate this process can be.
This white paper includes the following key findings:
- Through its investments in ports and its shipping operations, Maersk has been a leader in connecting China to the rest of the world and in facilitating China’s emergence as the world’s leading trading nation.
- The total cumulative impact of Maersk’s direct investment (including the direct, indirect, and induced impacts) is estimated at USD 21.5 billion in output, USD 6.7 billion in value added and over 991,000 in employment. The impact of its procurement is estimated at USD 25.8 billion in output, USD 7.9 billion in value added and 1.125 million in employment.
- Beyond the numbers, Maersk has also contributed to China by assisting Chinese suppliers, improving efficiency in ports and logistics, reducing costs, and improving environmental practices.
China’s economic reforms have created the world’s most dynamic economy. A major part of China’s economic development has involved foreign companies. This white paper contains an excerpt from a larger project initiated by the Hinrich Foundation and undertaken by Enright, Scott and Associates on the impact of foreign investment and foreign enterprises as a whole on China’s economy.
The results of the larger project were published in a book by Michael J. Enright, Developing China: The Remarkable Impact of Foreign Direct Investment (Routledge 2017). Using the tools of economic impact analysis, the author concludes that foreign direct investment (FDI) has contributed 33% to China’s GDP and 27% to its employment in recent years. The book offers a balanced and rigorous view of the full impact of FDI – using China as an example to illuminate the mutually beneficial partnership between investing companies and host economies – and more importantly, serves as an effective toolkit for policymakers and corporations to approach FDI globally. It is available in English and Chinese. Read the related article to learn more about the book.