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Chinese firms ‘going global’: Recent OFDI trends, policy support and international implications

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Abstract

This article analyzes Chinese foreign direct investment. First, recent empirical trends are explicated, showing that Chinese firms ‘going global’ has taken off, with significantly rising investment even in developed economies. Analyzing the specifics of Chinese outward foreign direct investment (OFDI) also shows that the motives of Chinese firms going abroad are mostly economic. Second, the role of policy support in Chinese OFDI is elucidated, showing that Chinese style internationalization differs from liberal role models. This is explained by the domestic structure of China’s political economy. However, the prevalent image in the West that the internationalization of Chinese firms is mostly policy-driven is erroneous. Thus, third, the role of fragmentation and competition in China’s ‘going global’ strategy is elucidated. In the outlook, it is exemplified that the growing significance of Chinese firms results in a restructuring of global competitive relations, which some Western governments and firms regard with suspicion.

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Notes

  1. Chinese OFDI stock does not include Hong Kong OFDI stock.

  2. Especially in developing markets, Chinese investors can often apply pressure to local government to guarantee the accomplishment of their economic interests.

  3. All in all, however, foreign economic policy seems to have sufficient independence to evade being captured by short-term economic interests of firms – as was also central in other successful state-assisted catch-up processes (see Evans, 1995).

  4. In addition, although Chinese OFDI promotion and support represents a relatively successful form of industrial policy, it should not be forgotten that many international buy-outs and M&A have also suffered setbacks. The failure of a contract to build a motorway in Poland or the failed effort by Chinalco to buy into Rio Tinto’s mines in Australia are just renowned examples of this.

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Acknowledgements

I thank two anonymous reviewers and Johannes Petry for their helpful comments. For valuable research assistance I am deeply indebted to Hauke Feil.

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Authors and Affiliations

  1. Goethe University Frankfurt, Campus Westend – PEG, Institute for Political Science, Grüneburgplatz 1, Frankfurt, 60323, Germany

    Tobias ten Brink

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Brink, T. Chinese firms ‘going global’: Recent OFDI trends, policy support and international implications. Int Polit 52, 666–683 (2015). https://doi.org/10.1057/ip.2015.19

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