Publication Type
Book Chapter
Version
acceptedVersion
Publication Date
1-2012
Abstract
Napoleon called China a ‘sleeping dragon’, but recent economic developments as China enters the twenty-first century show that the dragon is awakening. China has maintained strong economic growth since 1979 and sustained a GDP increase of more than 9 percent over the years. The total volume of economic output increased from 2.8 percent in 1970 to 7.23 percent in 2008, ranking China as the third largest economy in the world (United Nation Statistics Division Statistical Databases). China launched its ‘Go Global’ policy in 1999 to encourage highperforming Chinese firms to invest abroad and upgrade their global competence. Since then, outward foreign direct investment (OFDI) flows reached US$55.91 billion in 2008, equal to the FDI inflow in 2003. The annual growth rate of OFDI averaged 65.7 percent from 2002 to 2008 (Ministry of Commerce of China). OFDI flows via mergers and acquisitions (M&As) accounted for 54 percent of the total volume of OFDI (US$30.2 billion) and an annual increase rate of 379 percent (from 2002 to 2008). China’s OFDI volume reached USD52.15 billion in 2009 (excluding Hong Kong, Macao, and Taiwan), equaling 3 percent of global OFDI (World Investment Report, 2009). How are Chinese firms able to ‘go global’ so quickly – given their relatively weaker competencies in technological know-how and management skills and weak ability in integrating global value chains (Deng, 2004; Sun, Peng, Ren, & Yan, 2010)? According to multinational enterprise (MNE) theories based on Western firms, such as the Ownership-Location-Internalization (OLI) paradigm (Dunning, 1980, 1993), it is difficult to explain why this aggressive international expansion by Chinese firms works so well despite weaker firm-specific ownership advantage. We also note that China’s international expansion is largely undertaken by state-owned enterprises (SOEs). State policies have played a key role in pushing Chinese firms to go abroad, which poses a challenge to existing MNE and FDI theories (Dunning & Lundan, 2008; Sun et al., 2010).
Discipline
Asian Studies | Finance | Finance and Financial Management | Growth and Development
Research Areas
Finance
Publication
Chinese International Investments
Editor
Ilan Alon, Marc Fetscherin, & Philippe Gugler
First Page
11
Last Page
37
ISBN
9780230280960
Identifier
10.1057/9780230361577_2
Publisher
Palgrave Macmillan
City or Country
Houndmills
Citation
REN, Bing; Hao LIANG; and ZHENG, Ying.
An institutional perspective and the role of the state for Chinese OFDI. (2012). Chinese International Investments. 11-37.
Available at: https://ink.library.smu.edu.sg/lkcsb_research/4770
Copyright Owner and License
Authors
Creative Commons License
This work is licensed under a Creative Commons Attribution-NonCommercial-No Derivative Works 4.0 International License.
Additional URL
https://doi.org/10.1057/9780230361577_2
Included in
Asian Studies Commons, Finance Commons, Finance and Financial Management Commons, Growth and Development Commons
