Chinese Investment in Advanced Economies: Opportunities and Challenges

Abstract

With an increasing importance of outward foreign direct investment (OFDI) by multinationals (MNCs) from China in advanced economies, there is a need for deepening our knowledge of these Chinese MNCs not simply regarding their benefits and concerns, but more importantly regarding their dynamic and complex contexts. In this article, we investigate challenges that Chinese investors face in managing multiple embeddedness across heterogeneous contexts and why this multiple contextual embeddedness is particularly evident when Chinese firms acquire Western firms for competitive catch‐up. We contend that the interaction of Chinese investors with various local contexts depends on the extent to which these contexts are not only interrelated, but also overlain by temporal and spatial dimensions of context. Accordingly, contextualizing globalization of Chinese companies temporally and spatially will allow us to better understand their international expansion. More generally, we stress the need to place Chinese OFDI research in its broader context, temporally and spatially, and go beyond the mere institutional or cultural distance variables. Finally, we outline the key contributions from the six articles in this special issue and discuss the future research agenda stimulated by the issues raised in these articles. © 2017 Wiley Periodicals, Inc.

Human resource management in Chinese multinationals in the United Kingdom: The interplay of institutions, culture, and strategic choice

“…However, much of the focus of existing work has examined outward investment motives and whether existing theories can explain their internationalization process (Hennart, ; Luo & Tung, , ; Meyer & Peng, ; Peng, ; Ramamurti, ; Luo & Zhang, ). Advanced economies, including the United Kingdom, have become popular destinations for Chinese MNEs (Deng, Yang, Wang, & Doyle, ; Peng, ; Y. Zheng, ). The bulk of Chinese outward foreign direct investment (OFDI) is driven by mergers and acquisitions (M&As) undertaken in both developed and developing markets (Deng et al, ; Liu & Woywode, ; Luo & Tung, ; M. Yang & Deng, ; Y. Zheng, ; N. Zheng, Wei, Zhang, & Yang, ), supplemented by significant greenfield investment (Buckley et al, ; Deng, ), especially when motivated by seeking natural resources (Deng, ; Globerman & Shapiro, ; S. L. Sun, Peng, Ren, & Yan, ).…”

The challenge of Chinese state‐affiliated multinationals in benefiting from foreign subsidiary knowledge transfer: A criticism of light‐touch integration

“…The survey, via two standardized questionnaires, was administered to Chinese MNEs, with at least one subsidiary that has been operating in advanced economies for a minimum of 3 years. We set this requirement because, owing to a comparative advantage in high‐tech R&D, advanced economies are always a target for the strategic asset‐seeking investments made by Chinese MNEs (Ciabuschi et al, ; Deng, ; Deng et al, ). For foreign subsidiaries, we restricted our sample to subsidiaries that met the following criteria: (a) the subsidiary was majority‐owned by the MNE (i.e., the MNE had at least a 50% equity share of the subsidiary); (b) it had been part of the MNE for at least 3 years; and (c) it was important to the MNEs' business (so as to avoid sales offices or very small subsidiaries).…”

“…How can Chinese state‐affiliated MNEs engage in higher value‐added activities and foster innovation development? This question is of particular importance as, in essence, Chinese MNEs, particularly state‐affiliated ones, have engaged actively in strategic asset‐seeking investments overseas to acquire advanced knowledge, to compensate for their “latecomer disadvantage” and to “catch up” with the global giants by benefiting from the well‐developed host institutions (Deng, ; Deng, Yang, Wang, & Doyle, ; Ge, Stringer, & Ding, ; Lyles, Li, & Yan, ; Mathews, ; Sutherland, ).…”

The role of home governments in entry bargaining of multinationals: China's investment in Central Asia's natural resource sector

“…A favorable environment for internalization was one of the main factors for the successful global spread of emerging‐market multinationals (EMNEs) (Lattemann, Alon, Chang, Fetscherin, & McIntyre, ; Ramamurti, ). With rapid pace of internationalization of EMNEs in recent decades, there has been an increase in studies, that attempted to understand their uniqueness (Ramamurti & Hillemann, ), their corporate strategies (Luo, Sun, & Wang, ; Peng, ) and how their strategies and behaviors differ from that of developed country MNEs (Deng, Yang, Wang, & Doyle, ; J. Li, Newenham‐Kahindi, Shapiro, & Chen, ). Although studies reported the support of the Chinese government in expansions of its companies abroad (Luo, Xue, & Han, ; Morck, Yeung, & Zhao, ; Peng, ), it was also pointed out that there are few systematic accounts on how this support correlates with the internalization of Chinese multinationals (CMNEs) (J. Li et al, ).…”