Foreign Direct Investment (FDI) involves acquiring an interest in a foreign firm or affiliate and is typically a controlling interest. ... Department of Commerce defines foreign direct investment as ownership of at least 10 percent or more of the company by a foreign company and no other company has a larger share in the ownership. Most affiliates are majority owned with the foreign company owning 50 percent or more. ... food processing affiliates in foreign countries were majority owned. By contrast, 98 percent of foreign owned affiliates in the United States were majority owned by the foreign corporation.
Foreign Direct Investment can be accomplished in numerous ways:
· Constructing a new facility in a foreign country.
· Merging with a foreign company.
· Taking over a foreign company.
· Entering a partnership or a joint venture with a foreign company.
There are numerous motives for FDI, on the part of both the foreign government and the investing corporation. ... By establishing their own production plant when they want to enter a foreign market, they do not have share the knowledge. ... A company might want to invest in a foreign country because its competitors are doing so.
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