China remains a magnet for foreign investment

Reports that China is losing its attraction as a major investment destination seem off the mark, as China remains a darling of foreign investors.

Although labor costs have risen and growth last year was a 24 year low, China knocked the United States off the top spot for foreign direct investment for the first time since 2003.

Political and economic stability, infrastructure development, healthy resource availability, productivity and a skilled workforce are all influencing factors.

No global company can afford to ignore China, as its economy, the world's second largest after the U.S., is expanding steadily at a pace that outpaced major developed countries.

The government is pursuing growth driven by domestic spending and market forces, so that the economy is less reliant on exports and state-directed investment.

Many labor-intensive manufacturers may have chosen to relocate to lower cost countries, but this means that investment has shifted to more sophisticated sectors.

As the economy continues to prosper and evolve, industries such as healthcare, information technology, insurance and engineering, can gain a bigger foothold.

Labor costs have risen in developed coastal regions, however, this has opened up opportunities for interior provinces and smaller cities, where cots are lower.

The golden age for multinationals in China is not over, instead, enticing opportunities remain and more will emerge as reform measures begin to pay off; more market access and an improved regulatory environment will help ensure fairer competition.

What has changed for foreign investors is that easy money and easy opportunities may have started to fade. As the economy is restructured and the market matures, yesterday's winners must adjust.