Asset-Seeking Investment by Chinese Multinationals: Firm Ownership, Location,and Entry Mode
Keywords:
outward foreign direct investment, China, location, strategic asset-seeking, relational assets, state-owned enterprises, entry modesAbstract
Chinese outward foreign direct investment (FDI), although still emergent, is rapidly growing, widely dispersed amongst host locations, and increasingly driven by asset-seeking motives. However, characteristics of Chinese Multinational Enterprises (MNEs) differ considerably – not only from counterparts in the West, but also within China’s institutional environment. Drawing on a survey of Chinese MNEs, the paper investigates differences in asset-exploratory behaviour by location and ownership. The results reveal Chinese MNEs are motivated to invest in specific locations for asset exploration: strategic assets in North America, relational assets in Asia, and natural assets in Latin American and Australasia. State-owned enterprises are more likely to possess experiential advantages and to invest for strategic asset-seeking motives, whereas non-state-owned enterprises invest to seek relational assets. Chinese MNEs with advantages relating to technology and experience are more likely to employ full-control modes of entry than those with advantages relating to guanxi. Implications for policy and practice are discussed.
Keywords: outward foreign direct investment; China; location; strategic asset-seeking; relational assets; state-owned enterprises; entry modes
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