Inflows

In China, inflows rose by 6 per cent to $136 billion and

continued to shift towards services, which accounted for
a new record of 61 per cent of FDI. Inflows to the sector
expanded by 17 per cent, while FDI into manufacturing
stagnated, resulting in its share of FDI flows dropping
to 31 per cent.

Chinese companies have grown their market

shares and moved up along the value chain. In 2015,
domestic brands accounted for nearly four fifths of the
production of smartphones in China

At the same time, market-seeking investment has become

more important for foreign MNEs, as exemplified by the automotive industry, in
which MNEs continue to invest heavily, as the Chinese car market already the
largest in the world becomes increasingly central to their global strategy. In this
industry, foreign automakers investments are increasingly targeting populous inland
regions.

FDI inflows to the Republic of Korea, another major recipient, declined by 46 per
cent to $5 billion,
due to a major divestment by Tesco (United Kingdom). To consolidate its global
operation and focus
more on the home market, the foreign supermarket chain sold its Korean affiliate to
a group of
investors led by the local private equity firm MBK Partners for $6 billion in August
2015.