Foreign direct investment from China to developed economies: do extant conceptual and policy frameworks explain the cross-border investment behaviour of Chinese MNEs?

Abstract

The growth of Chinese MNEs has stimulated great interest in their outward foreign direct investment (FDI) strategies. This thesis attempts to contribute to the theoretical debate as to the usefulness of extant MNE conceptual and theoretical models. Theoretical frameworks are tested through the analysis of Chinese MNE FDI to developed economies, which are rich in strategic assets. The thesis is broken down into five main chapters. Chapter one examines the literature on Chinese MNEs and the conceptual frameworks used to understand their international investment behaviour in developed economies. Chapter two contributes to the rapidly growing theoretical literature set on Chinese MNEs which argues they use aggressive acquisitions, often to psychically distant, developed host countries, to obtain the strategic assets that they themselves lack. My results are broadly supportive of the growing theoretical literature on Chinese MNEs, arguing acquisitions are the primary mode of strategic asset seeking in developed markets. Chapter three evaluates the outcomes of strategic asset acquisitions. This chapter focuses specifically on the extent to which Chinese MNEs are able to absorb and productively harness the intangible strategic assets of their developed market acquisitions. In this chapter, I find no significant results for target country patent generation. Domestic (Chinese market) patents, however, rise significantly in the wake of acquiring an innovative firm from Japan, the US or Europe. Chapter four analyses the efficacy of developed market policies in generating FDI from China. I find that the presence of investment promotion agencies significantly increases the propensity for a Chinese firm to locate in a given location. Chapter five provides the conclusion for this thesis.