What is FDI?
Developed countries will benefit from natural
resource, cheap labor, and avoid trade barrier.
Developing countries will benefit from capital,
knowledge and technology.
Does not include stock exchange investment
Types of FDI
Firm will invest in the same business as the
firm does in their own countries.
• Example: Toyota factory in Kentucky, United
Forward and backward
• In forward vertical FDI, the firm will play a role
as a supplier and send finished goods through
subsidiaries or dealers to host countries.
• Example: Volkswagen sell though many car
dealer instead of using only one main dealer.
Forward and Backward
• In backward vertical FDI, the firm will invest in
the industry that support their business.
• Example: Ford Company build engine factory in
Mexico in order to decrease their cost.
It is the integrate investment between horizontal
• Example: Hong Kong firm set factory in china
and produce nonrelated product.
Methods of FDI
• Begin everything from zero
Ex: Buying land
Mergers and Acquisitions
• Joining between two firms
Ex: Buying local firm asset
Pros & Cons of FDI
• For developed countries
Decrease cost and increase profit
• For developing countries
Capital, knowledge and technology
• The host countries may lose their natural
resources because of non strict laws.
Effects of FDI
Stimulate nation economy
Stability of FDI
Infrastructure development and technology
“Crowding in” and “Crowding out”
Scale and pace of investment
Charoen Pokphand Group
Found by Chia Ek Chor and Chia Seow Hai in 1921
Started a small shop “Chia Tai Chung”
Expanded Business to Hong Kong, China, Malaysia
In 1954, Jaran started feed business known as
Thai Economic Development Plan
Dhanin worked for the government’s
General manager CEO
Mr. Dhanin Chearavanont
Joint venture (60:40) with Abor Acres
“The contract farming system”.
CP became a major player in agro-industry
CPF invested in 11 countries around the world:
• A major food producer in the world
• Expand distribution channels
• A country that has high rate of population
• Research and development
• Chicken feed
• Breed farming, livestock farm and meat
• semi-cooked food and ready-to-eat
The biggest and most successful nation of CPF’s FDI
is in Taiwan, called “CPE”.
One of the leading manufacturers in Taiwan
Gain major market shares
“Ready-to-eat” is very popular
Mr.Dhanin Chearavanont stated that :
“CP’s investment in China focuses mainly upon
agriculture. Whether it is producing animal feed, or
raising livestock such as pigs, the latest technology
and management systems are utilized.” (Dhanin, 2011)
Highest rate of population and potentials.
Main products are feed, farm and food.
CPF just took over CPP (Second largest
market shares in China) and become the
major shareholders (74.18%).
It will boost the net profit and enables
growth in the future.
Second largest rate of population.
Government supports foreign investors.
Main products are feed and farm.
CP brand in India is well-known
Trade with local wholesalers and retailers
Some products in domestic
consumption, supplies are less than
Characteristics to the
Overall Growth and
Finding Good Strategic Partner
The ability to integrate everything from feed
material production to retail distribution
Fully Integrated Business
Understand markets in developing countries
• Creates opportunities
• Invest in developing countries
• Marketing and distribution strategy
• “Know-How” > “Know-What”
American agricultural multinational “Abor Acres”
– Modern technology
– Import chicken breeding stock from USA
– Large scale Production
– More involved in international Market
American Company “Dekalb Co.”
– Reduce trade barriers
– Research and development of green bean and maize breeds
Japanese Company “Mitsubishi Corporation”
– Major target market for shrimp exportation
Foreign countries’ rules and regulations
Oversea Investment Risks
Investment Policy: Control and Follow-up system
• Appointments of Representative of Managing
Director and Finance executive
Conduct feasibility studies thoroughly
• Ensure that the investment is profitable and it is
worth the risk.
Meetings in Thailand with Overseas operation
management teams (Every 6 months)
• Reviewing performance and updating plan.
“High risk, High return”