ABSTRACT
Foreign direct investment (FDI) in services is a major feature of the current world economy; indeed, multinational enterprises (MNEs) have been investing significantly more overseas in the services sector than in manufacturing for quite some time. To date, however, there have been relatively few studies on service sector MNEs (and fewer still on service MNEs in developing countries), while their numbers continue to increase, along with a secular shift away from manufacturing towards services in both developed and developing economies (UNCTAD 2004a). In a similar vein, although China, the largest developing country recipient of FDI for the last decade (inward FDI flows amounted to US$53 billion FDI in 2003 alone), has grown largely on the basis of manufacturing industries, services have also been burgeoning, and FDI in service industries already represents some 30 per cent of the total annual inflow of foreign direct investment (UNCTAD 2002, 2004b). Moreover, spurred on by the requirements of the World Trade Organization (WTO) accession, China is promoting a rapid liberalization in services industries (UNCTAD 2002, 2004a),1 and it is likely that services FDI will increase as a proportion of all FDI over the next few years. Studies of service industries in developing countries, not least China, are desirable because they investigate a rapidly growing phenomenon, allow comparisons with FDI from other sectors (including the applicability of theories originally developed for manufacturing MNEs) and further an understanding of differences and similarities between developed and developing countries in terms of the operations and impact of MNEs.
