Foreign direct investment (FDI), which defined as ‘an investment made to acquire a lasting interest by an entity resident in one economy in an enterprise resident in another economy’ according to OECD (The Organization for Economic Cooperation and Development, 2008), has leap up to the world stage in the last century. Data from World Investment Report (2009-2012) illustrated that the global stock of FDI was about $21 million by 2011 and it grows faster than world trade and world output. FDI plays not just an important role in the world economy but also formed a vital part in China’s current economic system as well. China, which is the second biggest country in the field of FDI inflow worldwide, has experienced a soar of FDI stock from zero in 1978 to $712 billion in 2011, nearly 300,000 foreign-funded enterprises in China (Hill, 2014). However, the rise in FDI inflows has also seen the emergence of a strong focus on Corporate Responsibility (CSR) (Goyal, 2006). More substantially, a number of high-quality multinational enterprises (MNEs) have established in China accompanied by some socially irresponsible companies in the past few decades. The pros and cons of high FDI inflows have a profound effect on China and also have triggered some heated discussion. Government, which is the core of society, should perform some interventions on companies who are not socially responsible.
This essay will first analyze the effects both negative and positive that FDI has brought to China in terms of society and natural environment, and then identifies some characteristic of socially irresponsible companies. Finally, which is the most important past of this article, will propose some suggestions that government could take to cope with these businesses.
Over the last several decades, people all over the world have witnessed how globalization has changed people’s life (Held, 2004). Foreign direct investment (FDI),...