Research on the Utilization of Foreign Direct Investment in Yunnan Province of China

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FDIi refers actually used amount of FDI of this region (i), FDIw refers actually used amount of FDI of the whole country. GDPi refers the gross domestic product of this region (i), GDPw refers the gross domestic product of the whole country.

Although FDI Performance Index was always less than 1, it showed upward trend with 2012, a record high. Through nearly a decade of construction in Yunnan Province, its total FDI share of China improved significantly. However, the total GDP proportion in Yunnan increased slowly. In 2012, for example, the GDP percentage of Yunnan Province was only 1.99%, while Shanghai, Guangdong and other regions above 20%.

Table 2. The Performance Index of Utilization of FDI in Yunnan, 2000-2012. (USD100000000)

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2.2. Utilization of FDI by Mode

In 2000, FDI absorbed by wholly foreign-owned enterprises accounted for just 25.1% of the total amount in province, while the proportion was up to 68% in 2012. The trend of FDI in is obvious, which shows the enthusiasm of foreign investors in . Meanwhile, the proportion of foreign joint ventures is in a slight decline relatively. Nevertheless, both the level of development of utilization FDI in remain below the national average.

Table 3. Utilization of FDI in Yunnan Province by Mode, 2000-2012. (Unit: USD1000000)

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2.3. Utilization of FDI by Country or Region

The total amount of FDI from has always been at the top. From 2001 to 2011, the utilized FDI from Hong Kong amounted to 3.032 billion U.S. dollars, accounting for nearly half of the total and it turns out to be the major source of foreign direct investment in . Until the end of 2011, there has been already 1500 HK-founded enterprises settled in . In 2012, FDI from was $ 1,747,000,000, accounting for 79.8% of the total. Hong Kong investment in can be traced back in 1984, and, until now, it has involved many industries, mainly in manufacturing, services, tourism, bio-pharmaceuticals, bio-resources development, energy, transportation, real estate, and urban infrastructure. Generally speaking, while FDI in Yunnan develops fast, risks and vulnerability exist, owing to the excessive concentration of FDI sources.

Table 4. Utilization of FDI in Yunnan by Country or Region, 2001-2011

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In 2011, $ 185 million of foreign capital from British Virgin Islands settled in place, accounting for 10.68% of the Yunnan’s total; Barbados capital amounted to $ 60,000,000, representing 3.45% of total capital of Yunnan province. In 2012, in the top 10 regions (Hong Kong, Barbados, British Virgin Islands, Mauritius, Singapore, Switzerland, Myanmar, Taiwan, Indonesia, France), the actual investment accounted for more than 85% of the total amount of foreign capital actually used of Yunnan.

2.4. Utilization of FDI by Industry

It can be seen a majority of foreign direct investment in has long been concentrated in the secondary industry, accounting for more than 50% of FDI. However, utilization of FDI decreases gradually in secondary industry and shifts to tertiary industry. In 2012, total amount of FDI in Yunnan Province was up to $ 2,188,960,000, with $ 52,680,000 of animal husbandry and fishery,$ 704.3 million of secondary industry and $ 1,431,980,000 of tertiary industry, accounting for 2.41% ,32.18% ,65.42% respectively.

Yunnan FDI is mainly concentrated in manufacturing, real estate, as well as a small amount of wholesale and retail services. In particular, real estate is becoming a dominant force in attracting foreign investment. Real estate actually attacked 294 million U.S. dollars, accounting for 16.92 percent of the province's total foreign capital actually utilized in 2011 and the actual utilization of foreign capital amounted to 65,766 million U.S. dollars in 2012, accounting for 30.04 percent of the province's total. From the perspective of industry sector, in tobacco, pharmaceutical, real estate and urban development, tourism high-end market, energy development, mineral exploitation and processing, financial and some other supporting fields, foreign intervention is more concentrated.

Table 5. The Accumulated Amount and Project of FDI in Yunnan by Industry, 1999-2011. (Unit: USD100000000)

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2.5. Geographical Distribution of FDI in Yunnan

Foreign direct investment involves nearly all the cities in , but is seriously imbalanced. The province's FDI is clearly centralized in the capital city, , which plays a leading role in the utilization of foreign capital. FDI absorbed by itself has occupied more than 70% of the total. Over $ 1.2 billion of foreign investment flew into in 2011, and more than that, the amount increased further in 2012, up to nearly $ 1.6 billion. Dehong, Pu'er, Baoshan, Diqing and some other cities come after , although with a big gap. The ability to invite and utilize FDI in some cities such as Pu'er, Lijiang, Xishuangbanna and Zhaotong, has improved a lot at an alarming rate, with gross amount basically doubling. By virtue of their superior resources (e.g.: tourism resources in Lijiang) these places are getting more popular among foreign investors.

Table 6. Regional Distribution of FDI in Yunnan, 2011- 2012. (USD 10,000)

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2.6. Operating Performance of Foreign-funded Enterprises

There were 174 foreign-funded designated size industrial enterprises in Yunnan province in 2011, with the annually average number of employees of 48400, the industrial added value of RMB 1,449.1 billion, the industrial total output value of RMB 41.056 billion, the industrial sales output value of RMB 40.643 billion, the total enterprise assets amounted of RMB 40.891 billion, the revenue of principal business of RMB 43.19 billion, the total profits and taxes of RMB 7.504 billion, and the total profits of RMB 4.989 billion. The nine indicators for all designated size enterprises in accounted for 6.27%, 5.34%, 5.26%, 5.34%, 5.4%, 3.7%, 5.67%, 4.51% and 7.8% respectively. The small proportion declared the restrictions on FDI’s contribution to Yunnan local economy.

In 2012, the utilization of foreign capital in Yunnan was no more than $2.189 billion, accounting for 1.3% of total provincial GDP. At the same time, foreign companies achieved a large volume of import and export trade with $6.2 billion and about 3% of the whole province import and export value. Confined to foreign capital scale, the effect on the import and export of foreign enterprises was not as obvious.

Table 7. Major Economic Indicators of Foreign-funded Designated Size Industrial Enterprises in Yunnan, 2011. (RMB 100 million)

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