Over the last two decades, China's outward foreign direct investment (OFDI) has expanded rapidly. The country is now the world's second-largest source of OFDI. China is often viewed as a monolithic investor, however, without sufficient attention to the differences between investments by state-owned enterprises (SOEs) and private enterprises (PEs). To shed light on the internal complexity and heterogeneity of Chinese OFDI, we construct a panel dataset of investments in the U.S. across the 50 states and Washington, D.C. from 2005 to 2017, which we analyze using a spatial autoregressive model. We find clear evidence that the ownership structure of Chinese firms affects investment strategy and entry mode. Statistical analysis indicates that SOEs are more likely to pursue greenfield investment motivated by market-seeking and resource-seeking objectives, while PEs pursue mergers and acquisitions in order to obtain strategic assets. We also detect a positive and significant relationship between the presence of Chinese overseas communities and OFDI, with the strength of the correlation depending on ownership structure. Finally, we find that Chinese OFDI is spatially dependent, meaning that investments flow to states where they are already concentrated nearby. | 1563 HE Et al. 1 | INTRODUCTION Globally, outward foreign direct investment (OFDI) from emerging economies is rising, and China's multinational enterprises (MNEs) are playing a key part in this expansion (Alon et al., 2018). Since the early 2000s, driven by the Chinese state's "Go Global" policy, Chinese OFDI has reshaped the global economic landscape (Buckley, 2019; Lee, 2018). In 2018, the total value of OFDI from China reached US$143 billion, making the country the world's second-largest source of FDI (World Bank, 2020). Chinese OFDI initially expanded in the late 1990s as state-owned enterprises (SOEs), with their ample domestic strategic assets and support of the government, began looking abroad to invest (Gaur et al., 2018). In contrast to profit-seeking MNEs headquartered in advanced market economies, Chinese MNEs tend to be more state-directed or at the very least state-influenced. With substantial government backing, SOEs have historically dominated Chinese OFDI (Buckley, 2019; Deng, 2007). State support has allowed many Chinese MNEs to address ownership-specific disadvantages and engage in investment activities in environments that private firms might consider too politically risky (Buckley, 2019; Lu et al., 2018; Ramasamy et al., 2012). Yet, in recent years, Chinese OFDI has shifted from government-driven investment by central SOEs to more market-driven investment by private enterprises (PEs) (Li & Hendrischke, 2019). As Chinese firms, particularly privately owned ones, seek to expand abroad, they may turn to other sources of assistance apart from the Chinese government. Historically, by offering various forms of support, backing, and guarantees, Beijing has helped internationalizing Chinese firms to overcome obstacles in host countries such as informat...
Since the 2010s, foreign direct investment in real estate (FDIRE) by Mainland Chinese firms has emerged as a major force within global real estate markets, challenging Western investors’ traditional dominance. It is unclear, however, whether Mainland Chinese FDIRE is fueled by the same motivations as those of investors from advanced economies, which to date have represented both the primary investors and main objects of study. One major difference may be that Mainland Chinese investment originates in an institutional environment comprised of strong state intervention and social networks important for fostering business and ethnic ties. To uncover the potentially unique determinants and heterogeneity of Mainland Chinese corporate real estate investors, we build and analyze a state-level panel dataset of Mainland Chinese FDIRE by state-owned enterprises and private enterprises in the U.S. from 2010 to 2017. Our empirical results reveal the importance of Chinese migrants in promoting Mainland Chinese real estate investment, especially by private enterprises. Our findings also demonstrate that at the state level, Mainland Chinese FDIRE exhibits few agglomerative tendencies.
The characteristics of neighbouring regions, namely third-region effects, have become major determinants of location decision for FDI. The literature on spatial effects primarily focused on FDI from advanced economies, while it remains unclear to what extent the spatial effects have influenced the location of FDI by different industries from emerging economies in a host country. Using data on Mainland Chinese outward FDI in the United States at the state level from 2005 to 2017 and a spatial Durbin model, this study presents empirical evidence on the positive influence of third-region effects on location decisions for Chinese OFDI. Specifically, Chinese OFDI in one state complements those in neighbouring states. In addition, manufacturing FDI tends to follow strategic asset seeking and is influenced by third-region effects, whereas service FDI focuses more on market seeking. Finally, this study shows that social-cultural networks considerably facilitate Mainland Chinese investments in overseas markets.
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