The Outward FDI Strategies of Chinese MNEs: an empirical study of the Role of Business Group Affiliation and State Ownership Types

Abstract

Chinese (C) Multinational Enterprises (MNEs) have been emerging as important competitors on the global scene. This doctoral thesis aims to investigate the role of business group affiliation and state ownership types on CMNEs’ specific foreign direct investment (FDI) strategies. The thesis is broken down into five chapters. Chapter one provides a broad literature review on Emerging-market (E) MNEs and outlines mainstream International Business (IB) theoretical approaches to understanding EMNEs with specific reference to CMNEs. The important features of CMNEs’ outward FDI strategies via cross-border mergers and acquisitions (M&As) are highlighted. The second chapter conceptually and empirically explores whether business group affiliation influences CMNEs’ strategic asset seeking (SAS) FDI by type and property. It is argued that Chinese business group-affiliated firms have a greater likelihood of seeking patents, which have non-location-bounded (NLB) properties (i.e. can be exploited back in their domestic market, China), rather than trademarks, which have location bounded (LB) properties. Chapter three focuses on the impacts of state ownership types (i.e. incorporating central-government, provincial-government, municipal- or county-government and private ownership) on CMNEs’ technology and brand-seeking FDI. My findings reveal that Chinese privately owned enterprises (POEs) are more likely to seek both advanced technologies and foreign brands. In comparison, CMNEs owned by higher-levels of government have a lower likelihood of seeking both technologies and brands, but they tend to acquire target firms that involved in natural resources. In Chapter four it is demonstrated firstly, that Chinese POEs are less likely to undertake international product diversification. Those affiliated to a business group, however, have a greater probability of doing so; and secondly that CMNEs owned by higher government affiliation levels tend to seek more unrelated international acquisitions. From Chapters two to four, this thesis progressively contributes to providing a specific picture of how home country effects in China determine MNEs’ specific FDI strategies using firm-level data. Chapter five summarises the key findings and contributions of the thesis.