What is called industrial investment

I. The concept of industrial investment Industrial investment refers to the economic subject (including legal persons and natural persons) for the future to obtain income and now invest in factors of production, in order to form a kind of economic activity, that is, the economic subject for the future to obtain income and now invest in the production of funds or capital to the field of activity. Industrial investment is different from stock investment, bond investment and other pure financial investment is the point that pure financial investment is only manifested in the transfer of ownership, does not constitute the growth of production capacity, while industrial investment is the growth of economic production capacity, is to promote economic growth factors. Second, the role of industrial investment The role of industrial investment can be discussed from two perspectives: macro and micro (a) from a macro perspective, industrial investment can play a twofold role: first, affecting the level of aggregate social demand, which in the short term affects the level of output and employment. An increase in investment will correspondingly expand domestic demand, thereby increasing the level of aggregate social demand; a decrease in investment will correspondingly reduce domestic demand, thereby reducing aggregate social demand. In the short run, changes in the level of output and employment are also determined by the level of investment; an increase in investment will increase the level of social output while providing more employment opportunities. Secondly, through investment it is possible to increase the accumulation of investment in society and increase the potential productive capacity, thus contributing to economic growth in the long run. (ii) From a micro point of view, industrial investment has a threefold effect: first, it enhances the economic and technical strength of investors. Through the implementation of investment projects, investors not only increase capital accumulation, but also improve the ability to obtain income, at the same time, increase the ability to resist risk. Second, improve the ability of investors to continue to innovate. Investors through industrial investment, to achieve the commercialization of scientific and technological achievements and industrialization, you can continue to make innovation profits, so that investors have long-term economic development strength. Third, increase the market competition ability of investors. Market competition is not only the competition of talents, but also related to economic and technological strength and continuous innovation. Through the implementation of investment projects, the investors can expand the scale of production, to achieve economies of scale, or expand the scope of business, to achieve economies of scale, invincible in the market competition. Third, the characteristics of industrial investment (a) income. Maximize future net income is the main goal of investment. The main factors affecting the return on industrial investment are the amount of investment, annual production (or operating) costs and market conditions. First of all, generally speaking, the larger the investment amount, then its production (or operating) period of depreciation, amortization costs are also the greater, thus affecting the project's income. At the same time, in the presence of external financing and the proportion of debt remains unchanged, the larger the investment means that the greater the financial costs, which will also have an impact on the return on investment. Therefore, the scientific formulation of investment programs to reduce the amount of investment is an important way to improve the return on investment. Second, after the end of investment activities, that is, after the project is put into operation, the annual production (or operating) costs are also an important factor affecting the return on investment. From the investor's point of view to examine, the return is expressed as profit. Profit is from sales (or operating) income after deducting the production (or operating) costs, taxes, the formation of the difference. In sales revenue, tax rate under the same conditions, reduce production (or operating) costs is an important way to improve investment returns. Again, whether the products and services provided to the society after the project is put into operation can be realized at an acceptable price will also have an important impact on the return on investment. In addition, the length of the construction and commissioning period will also have an impact on the return on investment. (ii) Riskiness. The riskiness of an investment refers to the likelihood of the investment suffering failure. Obtaining the expected economic benefits is the most basic requirement of investment activities, but the future return of any investment is uncertain, and thus there is a risk. Types of investment risk are: political risk, that is, due to changes in the political landscape and the risk; market risk, that is, due to changes in the market and the risk of product stagnation; exchange rate risk, that is, due to changes in the exchange rate and the risk; technological risk, that is, due to the uncertainties in the research and development of new technologies lead to risk; financial risk, that is, due to the inability of the debtor to repay the debt on schedule and the resulting Risks. In addition, there are inflation risk, natural risk, business risk and interest rate risk. Investment activities involve a wide range of factors and have a long period of time, which makes them more risky. Generally speaking, the risk of investment and the expected return is a strong positive correlation, the greater the expected return, the greater the risk to be borne by the investor. (iii) Long-term. Compared with the production or business activities, long-term is a very obvious basic characteristics of industrial investment. Industrial enterprises produce products are generally small, production activities for the continuous input of factors of production, the final product of the continuous formation. This is not the case with investment activities. Direct investment is mainly used for the formation of fixed assets, the investment project is large, fixed location, and has the inseparability, and therefore the investment and construction of the cycle is very long. The process of industrial investment is a process of asset formation, which shows huge one-time expenditures, and for some time it does not provide any useful products for the society. The long-term nature of investment this feature objectively requires the implementation of the investment process should have continuity, in order to early formation of fixed assets, to play its benefits. Fourth, industrial investment project evaluation Project evaluation is an important means of industrial investment decision-making, investors, decision-making bodies, financial institutions to assess the conclusions of the project as the implementation of the project, decision-making projects and provide loans as the main basis. The goal of industrial investment project appraisal municipal investment decision-making to provide a scientific basis. Many types of industrial investment, its size, nature and complexity are different, so the content and focus of its assessment also have certain differences, but its basic content is similar, mainly including the following aspects: (a) industrial investment projects and enterprise general assessment of the first, the implementation of the project background for a brief analysis; second, a brief analysis of the basic general overview of all types of projects machine type. For capital projects, the main assessment of the project investor, the nature of construction, construction content, product program, project affiliation and the basis for the establishment of the project (such as project approval documents, selection of the letter of advice, etc.) and so on. For renewal and reconstruction projects, in addition to the above, it is also necessary to assess the basic profile of the existing enterprise, its history, organizational structure, technical and economic level, creditworthiness and economic benefits. For Sino-foreign joint venture projects, but also to assess the basic profile of the joint venture parties. (B) industrial investment project construction necessity assessment is mainly from the macro and micro point of view of the necessity of project construction, such as whether the construction of the project is in line with national industrial policy, whether in line with the national economic development planning and regional development planning, whether it helps to optimize the overall layout of the city and so on. (C) market demand analysis of industrial investment projects mainly analyzes the current market situation of the products (or services) produced by the project, the future development trend and the competitiveness of the products (or services) in the market. (D) the determination of the production scale of the industrial investment project in the necessity assessment and market demand analysis, combined with the specific circumstances of the project (such as plant location, financing capacity, technology and management level, economies of scale, etc.), to determine the optimal production scale of the project. (v) Evaluation of construction and production conditions of industrial investment projects mainly assesses whether the construction conditions of the project can meet the needs of normal implementation of the project and whether the production conditions of the project can meet the needs of normal production and operation activities. (vi) Engineering and technical assessment of the industrial investment project mainly assesses whether the engineering design of the project is reasonable and whether the technology adopted in the project is advanced, economical, reasonable and safe. (VII) Investment Estimation and Fund Raising mainly estimates the total investment amount of the project (including construction investment, working capital investment and construction interest, etc.), and formulates the corresponding fund-raising program and fund-use plan. (H) financial benefit analysis from the perspective of the enterprise or project, according to the collection and estimation of financial data, based on financial prices, prepare the relevant tables, calculate the corresponding technical and economic indicators, according to which to judge the project's financial profitability and solvency. (ix) National economic benefit analysis from the perspective of national economy, according to the collection and estimation of economic data, based on the shadow price, the preparation of relevant tables, calculate the corresponding technical and economic indicators, according to judge the project's contribution to the national economy. (X) Social benefit analysis from the social point of view, based on the shadow price of society, prepare social evaluation forms, calculate the corresponding technical and economic indicators, and judge the contribution of the project to the realization of social development goals. (xi) Uncertainty analysis examines the project's ability to withstand risks by applying relevant methods and calculating relevant indicators. (xii) On the basis of the above evaluations, the conclusion of the project evaluation is drawn, and corresponding problems and suggestions are put forward. In the actual evaluation, the above content can be adjusted according to the nature, scale and type of the project.