The Patterns of China's Outward Foreign Direct Investment

Liu, Wengang (2006) The Patterns of China's Outward Foreign Direct Investment. [Dissertation (University of Nottingham only)] (Unpublished)

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Over the past two decades, China's inward foreign direct investment (FDI) has attracted worldwide scholars' research interests. In contrast, the emerging outward FDI trend has received much less attention. Existing mainstream international business theories were mainly derived from the experience of western multinationals. Whether and to what extent they can apply to the case of Chinese outward FDI is questionable. To this end, this research is conducted to explore the patterns and distinct characteristics of China's outward FDI, specifically on entry modes, destinations and the role of the Chinese government.

This research primarily used secondary data complemented by small case studies to implement a systematic analysis on a broad level. Our major findings indicate that joint venture route is the most popular Chinese outward FDI entry mode because it allows firms to utilise local partners' knowledge and capabilities to reduce the barriers to entry and learn internally. Chinese resource-seeking companies are inclined to undertake mergers and acquisitions in order to acquire overseas assets to secure the natural resource supply or address their competitive disadvantages. In contrast, Chinese firms are less likely to undertake the greenfield strategy since it requires huge initial investments and support of substantial international experience, and also it may not be an effective strategy to address the motivations of the resource-seeking investors. In terms of destinations, China's outward FDI appear to be positively correlated with certain locational factors of the host country, which were found to be geographical and cultural proximity, market size and economic development, natural resource endowment, and the political and strategic importance perceived by the Chinese government. Besides, in contrast to the western experience, China's outward FDI appears to be highly influenced by the governmental involvement and intervention. This is evident in the historical timing of the entire OFDI flows, entry modes and destinations.

Item Type: Dissertation (University of Nottingham only)
Depositing User: EP, Services
Date Deposited: 29 Nov 2006
Last Modified: 20 Oct 2016 11:17

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