Họ và tên: Nguyễn Thị Linh

Mã sinh viên: 2014410085

I. Vocabulary
1. Define foreign portfolio investment. How does it differ from foreign direct investment?
 Foreign Portfolio Investment (FPI) is the purchase of shares andlong-term debt
obligations form a foreign entity. Portfolio investor do not aim to take control of a
corporation. They can liquidate their investment at market value anytime.
Compared with FDI: Foreign Direct Investment (FDI) is the establishment of a plant
or distribution network abroad. Investors can acquire part or all of the equity of an
existing foreign corporation either to control or share control over sales, production, and
research and development.
FPI FDI
Method Gainpart or all of ‘equity’, Gainpart or all of ‘equity’,
of an foreign company. of an foreign company.
Buying house’s debentures.

Aim Controlling or sharing control. Seeking profit from

investment.
Liquidity Long – term commitment or Liquidate the investment any
cannot withdraw the capital time.
easily.
Limitation of capital Limit up (higher than FDI). Limit down.

2. They are raw materials, markets, product efficiency, and “know-how”…

3. Examples of investment incentives are: cash grants, lower taxes, accelerated
depreciation, training allowance,… They are supposed to attract foreign investment.
4. It is called multiple-distributor, which means a sales agent who represents for more
than one manufacturer.
5. It is payment made by a foreign manufacturer to a company that has licensed
the manufacturer to produce its products.
6. It is a subsidiary formed by more than one corporation.
II. Reading
1. They normally seek to control over production, R&D, sales,…
2. Their first strategic objective is the market for its present or future products. In addition,
they are also raw materials, product efficiency and know-how.
3. They are: interest rates, cash flow projection, sources of working capital …
4. A foreign project is said to be viable when it has a availably reliable access to
outside financing, while a non-viable project has a lower rate of return compared to the
project in the host country.
4. A foreign project is said to be viable when it has a availably reliable access to
outside financing, while a non-viable project has a lower rate of return compared to the
project in the host country.
5. They are: antitrust legislation and labor laws.
6. Because these areas need to attract foreign investment to solve the problems like low-
income and living standard or unemployment.
7. It will usually engage distributors who receive a commission on products sold.
8. The drawback of licensing or authorizing foreign distribution is that manufacturer gives
up the control over their product so if licensed product lacks quality, the
exporter’s reputation suffers.
9. It isthe original manufacturer gives up control over the product so if licensed
product lacks quality, the exporter’s reputation suffers.
III. Exercises
Exercise 1:
1. Portfolio investment
2. Profit
3. Assets employed
4. Support foreign investment
5. Distributor – engaged – commission
Exercise 4:
- Which country should I invest into? What is its investment incentives?
- Should I invest in type of joint venture or wholly foreign company? How about the
legislations of that country?
- What am I seeking for in that country? Resources, market or efficiently stragegic assets?