China’s outward foreign direct investment (OFDI) to developing countries: the case of Central and Eastern Europe (CEE)

Abstract

China’s outward FDI reached a peak in 2016, making it as important a foreign investor as Germany, France and the United Kingdom. In this paper, we investigate the main motivations behind Chinese investments in developing countries, Central and Eastern Europe (CEE) in particular. Although the size of Chinese investment in CEE is small, the region is strategic for China as it is a gateway into Western Europe under the Belt Road Initiative. As new or future members of the EU, the CEE countries also provide access to the single market. We find that the motivations to invest in developing countries differ according to regions. Based on outward FDI data provided by the Chinese authorities, the number of Chinese FDI greenfield and M&A projects from Financial Times and Zephyr respectively, as well as face-to-face interviews with companies with investments in CEE, we find that for the case of CEE, domestic markets, access to the larger EU market, strategic assets like technology and prior relationship with the CEE are main reasons for investing.

Keywords:

• Outward FDI
• China
• Central and Eastern Europe

AEJ:

• F21
• F23
• O11

Disclosure statement

No potential conflict of interest was reported by the author(s).

Correction Statement

This article has been republished with minor changes. These changes do not impact the academic content of the article.

Additional information

Funding

The first author acknowledges funding received from the Economic Research Institute of Central and Eastern Europe (ERICEE) of the China Europe International Business School. The second author would like to thank the Institute of International Business and Governance, established with the partial support of a grant from the Research Grants Council of the Hong Kong Special Administrative Region, China (UGC/IDS16/17), for its support. The research of the second author is funded by the Research Grants Council of Hong Kong Special Administrative Region, China (UGC/FDS16/B20/19).

Notes on contributors

Bala Ramasamy

Professor Bala Ramasamy is Professor of Economics at China Europe International Business School (CEIBS). His research interest focuses on Asian economies, Foreign Direct Investment, Corporate Social Responsibility and International Business Strategy. His research has been published in the Journal of Business Ethics, World Economy, the Journal of World Business, the Journal of World Investment and Trade, the Journal of Business Research, among others. His views are regularly sought by the media. He has been interviewed by CCTV, Bloomberg, AP, Al Jazeera, Channel NewsAsia etc. His comments have also appeared in the Wall Street Journal, China Daily, Global Times and other newspaper around the world.

Matthew Yeung

Dr Matthew Yeung is Associate Professor of Research Methods at the Insitute of International Business and Governance of the Open University of Hong Kong. His research interest focuses on International trades, Foreign Direct Investment, consumer sentiment and Big Data Analysis. His research has been published in the Journal of Business Ethics, World Economy, the Journal of World Business, the Journal of World Investment and Trade, the Journal of Business Research, among others.