the English full name of p>FDI is Foreign Direct Investment. FDI is one of the main forms of modern capital internationalization. According to the definition of the International Monetary Fund (IMF), FDI refers to the investment behavior of investors in one country who use their capital for the production or operation of other countries and have certain operational control rights. It can also be said that a resident entity (foreign direct investor or parent company) of a country (region) establishes a long-term relationship with an enterprise (foreign direct investment enterprise, branch enterprise or foreign branch) of another country outside its own country (region), enjoys lasting benefits and controls it. This investment involves both the initial transaction between two entities and all subsequent transactions between them and between foreign branches, whether joint or non-joint.

The difference between FII and FDI is as follows:

1. International indirect investment has no control over the business activities of fundraisers;

And international direct investment has control over the business activities of fund raisers.

2. High liquidity and low risk

International indirect investment has nothing to do with the production and operation of enterprises (because there is no control right). With the development and perfection of the secondary market, securities can be bought and sold freely, with high liquidity and low risk.

International direct investment generally involves the production of a country's enterprises, and the production cycle is long, generally more than 1 years, and the investment is directly repaid by the profits of the enterprises. Once the funds are invested in a specific project, it is difficult to withdraw the investment, which has small liquidity and high risk.

3. Different investment channels

International indirect investment can only be made through stock exchanges.

International direct investment can be invested by signing an agreement as long as both parties negotiate successfully.

4. Different investment connotations

International indirect investment can also be called "international financial investment", which generally only involves funds in the financial field, that is, monetary capital movement. Using virtual capital.

international direct investment is the investment of production factors, which involves not only the movement of monetary capital, but also the movement of production capital and commodity capital and its control over the use of capital. Using real capital.

5. Spontaneity and frequency

Influenced by the international interest rate difference, international indirect investment shows certain spontaneity, and often flows spontaneously from low interest rate countries to high interest rate countries. International indirect investment is also affected by the changes in the world economic and political situation, and often moves frequently in the international arena to follow speculative interests or seek safe places. After World War II, with the gradual improvement of the international capital market, the scale of international indirect investment. It's getting bigger and bigger, and the flow speed is getting faster and faster. It is speculative, and in this field, the boundary between investment and speculation is sometimes difficult to distinguish.

international direct investment is the use of real capital to engage in business activities, and the change of profit or loss is relatively slow. Once invested, it is relatively stable.

6. Different gains

The gains of international indirect investment are: interest and dividends.

the benefits of international direct investment are: profits.

multinational corporations are the main form of FDI. The essence of international direct investment (FDI), some scholars emphasize "operating resources", especially the intangible assets of enterprises. For example, Japanese scholar Masanobu Hara (1992) believes that FDI is an international transfer of special business resources within an enterprise; Kiyoshi Kojima (1987), another Japanese scholar, thinks that FDI is based on technical expertise in management. Some scholars emphasize "control", for example, A.G. Kenwood and A.L. Lohed (1992) believe that FDI refers to a company in one country setting up a branch in another country or gaining control of an enterprise in that country. Relevant international organizations, government departments and theoretical circles, such as the United Nations Division of Transnational Corporations and Investment, the International Monetary Fund, the WTO, and the US Department of Commerce, believe that the fundamental difference between international direct investment and international indirect investment lies in whether or not to obtain the control right of the invested enterprise, because the intangible assets formed by FDI are in the core position, while monetary capital is in a very secondary position, so it can only be directly invested. Therefore, FDI not only directly participates in the management, but also its direct goal is to obtain the control right of the invested enterprise. Based on this, some scholars believe that "FDI refers to a long-term investment behavior in which enterprises in a country or region gain control of some or all foreign enterprises through the international transfer of monopoly advantages (mainly intangible assets) in order to achieve a high degree of unity between the ultimate goal and the direct goal."

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