Globalization of Chinese firms, location choice, and socio-cultural milieu

Abstract

For a number of years, the bulk of Chinese outward foreign direct investment was found in countries with lower technological development and minimal management capabilities. Recent research and preliminary data have shown a swift shift in outward foreign direct investment allocation by Chinese multinational enterprises to OECD countries. We argue that the main reasons for this shift are: location strategy, firm-specific resources, new government policy, and socio-cultural milieu. This paper examines the factors which influence Chinese manufacturers' decisions to invest in OECD countries. We integrate the resource-based view, institutional view, and economic view to explain the propensity of Chinese manufacturing firm investment. We contribute to Chinese investment decision and foreign direct investment location theory by incorporating these three views.

Keywords:

• international economics
• business economics
• economic development
• technological change
• growth

Acknowledgements

Very special thanks to Jia Feng fora ll of her help in research and data collection that made this paper possible.

Notes

1. This relationship is straight forward and can be easily seen through the World Bank or International Monetary Fund (IMF) data. We have not included the data for this to keep the paper in line with a non-quantitative approach.