Exploring China’s state-led FDI model: Evidence from the extractive sectors in Latin America

Shapiro, Daniel; Vecino, Carlos Enrique; Li, Jing

doi:10.1007/s10490-017-9526-z

Cited by 48 publications

(35 citation statements)

References 57 publications

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“…Actually, China has obtained the market economy status from many of them (Economic Commission for Latin America and the Caribbean, 2007). Besides, the Chinese government gives state development loans to Latin American countries, which reinforce bilateral diplomatic relations, thus facilitating Chinese firms' access to local natural resources and reducing disputes with host governments in destinations where government-related political risk is higher for MNEs from other countries (Shapiro, Vecino, & Li, 2018).…”

Section: Introductionmentioning

confidence: 99%

Host country experience, institutional distance and location choice of Chinese MNEs

Quer

García

Andreu

et al. 2019

CCSM

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Purpose The conventional wisdom suggests that the lack of prior host country-specific experience and a higher institutional distance deter multinational enterprises (MNEs) from entering a foreign country. However, past studies report that Chinese MNEs show an unconventional risk-taking behavior choosing foreign locations, where they have no prior experience or there is an increased institutional distance. Drawing on the institutional theory, the purpose of this paper is to argue that Chinese Government official visits to the host country may act as a risk-reduction device, thus providing an explanation for such an unconventional behavior. Design/methodology/approach The authors develop two hypotheses regarding how Chinese Government official visits moderate the impact of host country-specific experience and institutional distance on the location choice of Chinese MNEs. The authors test the hypotheses using a sample of investment location decisions by Chinese MNEs in Latin America. Findings The authors find that government official visits mitigate the lack of firm’s prior host country experience. However, only high-level government visits reduce institutional distance. Originality/value The authors contribute to the international business literature by analyzing how home country government diplomatic activities may pave the way of host country institutional environment for foreign MNEs from that home country. In addition, the authors provide an additional explanation for the unconventional risk-taking behavior of Chinese MNEs. Finally, the authors also contribute to a better understanding of the decision-making process of emerging-market MNEs entering other emerging economies.

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Section: Introductionmentioning

confidence: 99%

Host country experience, institutional distance and location choice of Chinese MNEs

Quer

García

Andreu

et al. 2019

CCSM

View full text Add to dashboard Cite

show abstract

“…Apart from firm's host country experience, bilateral diplomatic relations between the home and the host country may also play a role in facilitating local legitimacy building. Diplomatic relations between governments symbolize an interaction between home and host institutions and they may act as a “bridge” between countries, thus facilitating investment decisions (Duanmu, ; Li, Meyer, Zhang, & Ding, ; Shapiro et al, ). Friendly diplomatic relations may stabilize host country institutional environment, reducing the risk perceived by foreign firms and enhancing their legitimacy in the host country (Child & Marinova, ; Li et al, ).…”

Section: Theory and Hypotheses Developmentmentioning

confidence: 99%

“…The Chinese government is playing a significant role in boosting political and economic ties with Latin America, by signing investment and trade agreements (Fornes & Butt‐Philip, ). Moreover, by reinforcing bilateral diplomatic relationships with Latin American countries, including official visits, the Chinese government facilitates the access of Chinese MNEs to local natural resources, also reducing potential conflicts with host governments in a region where political risk is higher for MNEs from other home countries (Shapiro, Vecino, & Li, ).…”

Section: Introductionmentioning

confidence: 99%

Establishment mode choice by Chinese firms in Latin America: The role of host country‐specific experience and government official visits

Quer

García

Andreu

2019

Thunderbird Intl Bus Rev

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This study addresses establishment mode decisions by emerging-market multinational enterprises entering other emerging economies. More precisely, we examine the influence of prior host country experience and home government official visits on the choice between the acquisition of a local company and the creation of a new subsidiary from scratch. By analyzing 315 investments carried out by Chinese firms in Latin America, we obtain that they are more likely to enter through an acquisition when they have established prior subsidiaries in the host country. Moreover, recent Chinese government official visits contribute to mitigate the difficulties of an acquisition for those companies with less local experience. K E Y W O R D SChinese firms, establishment mode, government visits, Latin America, local experience

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“…The Chinese authorities have begun to step up their campaign to reduce such perceptions. One strategy has been to provide development loans to potential hot countries, reducing risk, increasing access to resources, and lowering the likelihood of political conflict (Shapiro, Vecino, & Li, 2018). A second strategy has been reform of SOEs and the introduction of incentives to encourage their innovativeness (Ralston et al, 2006).…”

Section: Advanced Economies Often View Chinese Soes Quite Adversely Wmentioning

confidence: 99%

Evolution of China’s Outward Foreign Direct Investment Regime: Implications for Southeast Asia Under the Belt and Road Initiative

Yan

Enderwick

2019

Singapore Econ. Rev.

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Assessment of the likely impact of Chinese OFDI on the ASEAN members of the Belt and Road Initiative (BRI) requires understanding of the evolution of Chinese policy, regulations and institutions. Utilizing recent developments in institutional theory, this paper examines the interplay between China’s OFDI regulations and enterprise supportive policies. Liberalization of FDI regulations complements policies of technological catch-up and the development of regionally focused multilateral institutions. Evidence of an increasing level of Chinese OFDI since 2003, and of a larger share attracted to the BRI group, particularly the ASEAN countries, is consistent with the theorizing.

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Exploring China’s state-led FDI model: Evidence from the extractive sectors in Latin America

Cited by 48 publications

References 57 publications

Host country experience, institutional distance and location choice of Chinese MNEs

Host country experience, institutional distance and location choice of Chinese MNEs

Establishment mode choice by Chinese firms in Latin America: The role of host country‐specific experience and government official visits

Evolution of China’s Outward Foreign Direct Investment Regime: Implications for Southeast Asia Under the Belt and Road Initiative

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