Foreign Direct Investment (FDI) is a category of investment that reflects the objective of establishing a lasting interest by a resident enterprise in one economy in an enterprise that is resident in an economy other than that of the direct investor. The lasting interest implies the existence of a long-term relationship between the direct investor and the direct investment enterprise and a significant degree of influence on the management of the enterprise. The direct or indirect ownership of 10% or more of the voting power of an enterprise resident in one economy by an investor resident in another economy is evidence of such a relationship. FDI is measured on an asset/liability basis or on a directional basis. On an asset/liability basis, FDI statistics are organized according to whether the investment relates to an asset or a liability for the reporting country (FDI IN FIGURES, 2014). In 2008, during the financial and economic crisis which swamped the world economy in 2008 had impacts on foreign direct investment (FDI) that had become the major driver of the globalization process. The Chinese stimulus program to get the country through the global crisis was much criticized by western experts, because it was thought to extend the Chinese development model which is strongly based on exports and investments in infrastructure and favors state-owned enterprises. Yet, during the global financial and economic crisis China succeeded to remain a much favored location for inward FDI compared to other destinations of FDI and already registered an early rebound of the incoming flows at the end of 2009. Also despite the crisis China’s outbound FDI continued to expand, not only to get hold of scarce resources in mineral rich countries, but even more so for market seeking reasons in developed countries.

Factors Influencing FDI into China
China has many precise advantages that influence foreign direct investments into the country (Zhang, 2002). The factors that influence the FDI inflows into China can be categorized into three classification, Micro, macro and strategic factors. Micro factors consists of firm ownership specific advantages such as product differentiation and the size of the company. Macro – factors of FDI focuses on the on the growth of the host country and the market size of the host country. This can measured by gross domestic product (GDP), GDP per capita, GNP, or GNP per capita, as rapid economic growth may create large domestic markets and businesses. There are other factors in the macro environment such as exchange rate, taxes, political risk, etc. Strategic determinants denote to those long-term factors such as to defend existing foreign markets, to diversify firms’ activities, to gain or maintain a position in the host country, and to complement another type of investment.

A large or growing host market is a positive factor for the profitable investments. The market size is generally measured by GDP, GDP per capita, GNP, GNP capita or the growth rate of these factors. The population of china as of July 1, 2014 is estimated at 1,393,783,836. Its population is estimated to be equivalent to 19.24% of the total world population (worldometers, 2014). The GDP of China in 2008, 2009, 2010, 2011, 2012, 2013 and 2014 are 9.6, 9.2, 10.4, 9.3, 7.7, 7.7 and 7.4 respectively (Chinability, 2015). This large market size has a positive effect on Inward FDI into china. A bigger domestic consumer market creates lots of business opportunities for the companies operating in China.
One of the main advantage of FDI inflows in china is the availability and cheap labour cost in China. This is due to the compulsory education of a minimum nine years. This factor has also helped China’s rapid growth as an important global competitor in labour intensive manufacturing. As labour cost is a vital part of total production costs, especially in labour intensive manufacturing, the lower the labour cost the more attractive for Inward FDI.

Fewer barriers to FDI and fewer policies to improve foreign investment into china played an important role into attracting FDI into China. Their primary motive was that FDI would bring new technologies, new method of working, and more expertise and improve the export sector in China. China has also used tax incentives to guide FDI into chosen regions, industries and economic sectors. They also enjoy exceptions and reductions in the national business income taxes and other incentives such as exemption of custom duties and value-added tax for imported equipment and technologies, full refund for income tax paid on reinvented earnings, etc (tseng & zebregs, 2002). The creation of special economic zones (SEZs) was a unique step towards integration and ideally suited the overseas Chinese. They identified items for production, partners for joint ventures, invested large amounts and exported them through their networks.

Infrastructure and geographical closeness is also an influential factor in attracting inward FDI. Geographical closeness of China reduces a company’s information and managerial uncertainty, reduces monitoring and transportation cost, etc. Overall it reduces the company’s risks and costs. On the other hand convenient and developed infrastructure helps to attract more FDI. It reduces transportation cost and saves times in shipping raw materials, products etc.

Fords reason for their FDI in China
Ford Motor Co. is involved in the manufacturing and distribution of automobiles. It operates through two business sectors: Automotive and Financial Services. The Automotive sector operates through four business segments: North America, South America, Europe and Asia Pacific Africa (Ford Motor Co, 2014). Ford is currently operating in a joint venture in China with Ford owning 25%, Mazda motor company owning 25% and a Chinese company Chongqing Changan Automobile owning 50%. Ford has many competition in China with company such as General Motors, Volkswagen, BMW, Honda, Hyundai, Toyota etc. Due to higher competition Ford uses Push strategy to attract customers. The sales figure for Ford after the global crisis for the years 2009, 2010, 2011, 2012, 2013 are 440,619, 483,288, 519,390, 626,616, 935,812, 1,114,669. This suggests that even after the global crisis Ford has managed to increase its sales every year and is growing. This are because of the reasons discussed above about the labour cost, market demand and structure, tax and infrastructure of china, which helped Ford and other FDI to remain in China even after the global crisis. Ford is also investing heavily in their factories, In September 2009, Ford announced it would begin construction on its 3rd plant in China worth $490 million factory in Chongqing that will make Focus cars starting in 2012. The plant will make 150,000 vehicles a year boosting Ford’s annual production to 600,000 vehicles. Recently in 2014 they invested $1.1 billion to takeover and upgrade a factory in northeast China. The factory will increase Ford's production in China by 200,000 vehicles annually to help meet the country's growing demand for passenger vehicles.

Ownership-specific advantages denote to the advantages derived from specific assets, particularly intangible assets, and capabilities which bring a superior competitive position to the possessing firm. To compete successfully in foreign markets, a firm needs asset power which is a set of necessary resources such as proprietary products, product or process technologies, specialized know-how about production, and management or marketing capabilities. The possession of those assets leads to the competitive advantages (Kimura and Pugel, 1995) and ultimately to a firm’s success in the market it serves. Ford has ownership specific advantage in china such as their technology they use to manufacture their cars. Ford is also a world renowned brand which attracts most of the customers, it also has economies of scale in manufacturing as they manufacture in a huge scale because of their huge assets in China which gives them a competitive advantage over their competitors. Therefore investing in China is a profitable scenario as they will experience ownership-specific advantages.

Comparative advantage is the ability of a firm or individual to produce goods and/or services at a lower opportunity cost than other firms or individuals. A comparative advantage gives a company the ability to sell goods and services at a lower price than its competitors and realize stronger sales margins. Ford has a comparative advantage in producing smart cars with fuel efficiency which is essential in today’s world as everyone is looking for cars with most fuel efficiency. They have also adapted a new strategy to cut down production by introducing a new online manufacturing process that reduces huge expenditure on raw materials as they now do not need different segments of engineering and production. With the cheap labour force Ford will be able to gain comparative advantage than producing in their parent country US.

Location – specific advantages occurs when a company or an economy can operate an activity better than others for reasons related to location such as labour cost, availability of natural resources, availability of transport and communication, infrastructure etc. China is very popular for its location – specific advantages with low cost labour and resources. Most of the Chinese work force are also specialized in the manufacturing process and availability of raw materials is also an important factor in China. The minimum wage per month in Beijing was 1,400 yuan in 2013. This factors would help ford to manufacture their cars at a very low cost and improve their profitability for which they are still operating in China.

Michaels porter diamond theory under main four conditions which are factor condition, demand condition, firm strategy, structure and rivalry and related and supporting industries. In China due to its huge population the demand for goods are usually high for which Ford can be benefit and utlise this factor. Factor conditions are also very essential such as natural resources, skilled labour, location and infrastructure are very essential in Fords factors of production. Which are available in China.

This being said there are many difficulties that FDI in China faces. The most common is the competitiveness in China, as all the big industries are operating in China it’s hard for some MNC’S to survive in the industry. Chinese companies have competitiveness in producing low value, labour intensive goods. These companies have become successfully introduced foreign technologies and became a strong competitor for the MNC’s.
Another factor is that in China MNC’s cannot purchase land but they can lease it for a period of 50 years. Therefore there are no surety of their factories of what happens after 50 years. The utility and process gas cost are very high in China with many “hidden” costs. Another sounding problem is the language, this is a constant challenge to properly understand and it can take lengthy periods to effectively get things started. Cultural differences present another standing problem due to some very different ways of doing and seeing business approaches. A good example lies in product quality which is often viewed in this part of the world as being something that can be sacrificed for higher quantity. This issue can lead to brand risk as customers who buy from China and receive poor quality products may go elsewhere. It is advisable to have a quality control unit on-site.

Conclusion
Foreign direct investment in china has increased even after the global crisis in 2008. They are still world’s number one inward FDI country. Foreign Direct Investment in China averaged 387.67 USD Hundred Million from 1997 until 2015, reaching an all time high of 1195.62 USD Hundred Million in December of 2014 (Trading Economics, 2015).