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48 Outward Foreign Direct Investment by Enterprises from Chile Arauco (2004). Memoria anual 2003, Santiago, Chile. BCI (2004). Análisis de empresa: CMPC S.A., BCI Corredor de Bolsa S.A., Departamento de Estudios, Santiago, Chile, March 29. Calderón, Álvaro y Ramón Casilla (1999). “Grupos financieros españoles en América Latina: una estrategia audaz en un difícil y cambiante entorno europeo”, Serie Desarrollo Productivo, N° 59 (LC/G.1244-P), Santiago, Chile, ECLAC. Calderón, Álvaro y Stephany Griffith-Jones (1995), “Los flujos de capital extranjero en la economía chilena. Renovado acceso y nuevos usos”, Serie Desarrollo Productivo, N° 24 (LC/G.1868), Santiago, Chile, Economic Comission for Latin America and the Caribbean (ECLAC), September. Cencosud (2003). Memoria Anual 2002 y Estados Financieros, Santiago, Chile. CGE (2005). Memoria Anual 2004, Santiago, Chile. COPEC (2002). Memoria 2001, Santiago, Chile. ECLAC (2000). La inversión extranjera en América Latina y el Caribe, 1999 (LC/G.2061-P), References Santiago, Chile, January. United Nations Publication, Sales no.: S.00.II.G.4. Economic Commission for Latin America and the Caribbean (ECLAC) (1998). La inversión extranjera en América Latina y el Caribe, 1998 (LC/G.2042-P), Santiago, Chile, December. United Nations Publication, Sales no.: S.98. II.G.14. Falabella (2001). Memoria anual 2000, Santiago, Chile. Falabella (2004). Prospecto de emisión de bonos desmaterializados series C y D, Santiago, Chile, November. Feller-Rate (2004). Informe de clasificación, MASISA, Feller-Rate Clasificadora de Riesgo, Santiago, Chile, March. Masisa (2005). Memoria Anual 2004, Santiago, Chile. Terranova (2004). Memoria Anual 2003, Santiago, Chile. UNCTAD (2005). World Investment Report 2005: Transnational Corporations and the Internationalization of R&D, Geneva. United Nations publication, Sales No. E.05.II.D.10.
A. Introduction Over the last decade, China has become a noteworthy outward investor and the stock of Chinese OFDI now exceeds that from the Republic of Korea, whose TNCs are already formidable international competitors. 22 While the scale of the two economies is different, what is of incontrovertible interest is that sizeable numbers of Chinese companies have begun to invest overseas at a very early stage in the country’s development. This has implications for the drivers and motives behind the OFDI, which will be discussed in this paper. The paper will also examine the trends, broad dimensions and characteristics of Chinese OFDI, including the legal and regulatory framework, and offers some policy suggestions. B. OFDI from China: Trends and development Chinese enterprises have been investing abroad prior to the open door policy of 1979. However, such early enterprise internationalization was limited, partly because of the result of very specific aims permitted by the State. After 1979, OFDI has accelerated and increasingly it is possible to talk of genuine Chinese TNCs. Chinese OFDI has grown considerably since the early 1990s, both in terms of total annual FDI outflows – from $367 million in 1991 to over $2 billion in 2003 – and size of each investment (table 1). In the early 1990s, the average size of each investment was * This paper was prepared by Hafiz Mirza, formerly Professor of International Business, University of Bradford, School of Management and is presently Chief, Development Issues Section, Investment and Issues Analysis Branch, Division on Investment, Technology and Enterprises, UNCTAD, and Axèle Giroud, Senior Lecturer, Manchester Business School. 22 UNCTAD (2004), World Investment Report 2004: The Shift towards Services, New York and Geneva, table 1.11. CHAPTER V TABLE OF CONTENTS 49 OUTWARD FOREIGN DIRECT INVESTMENT BY ENTERPRISES FROM CHINA* 49 as low as $0.3 million, whereas by 2003 the average investment was $4.1 million; and some investments were larger. Geographical distribution. The geographic spread of Chinese OFDI has changed. In the early 1990s, the bulk of the FDI was in North America, but in recent years the predominant share of Chinese OFDI has been received by Asian countries. There has also been dispersal of flows, with Latin America, Africa, Europe and Oceania all receiving sizeable amounts. This represents a move from market-entry type of sales subsidiaries to a more complex pattern of TNC expansion, reflecting China’s growing need for raw materials, other resources (including labour) and diversified markets. 23 Five host countries represent over 50 per cent of the total approved Chinese OFDI and the 10 largest recipients about a two-thirds share (table 2). Hong Kong (China) alone (a special case, since it is a “special autonomous region” of China 24 ) receives about a third of total Chinese approved OFDI. There are some idiosyncrasies – for example, Denmark is the fifth largest because of a single project, but in most cases the larger recipients represent target countries because of possible reasons such as market size (United States), proximity (Hong Kong (China), Macau (China), Republic of Korea, Thailand), resources (Canada, Peru, Indonesia) or – conceivably – other opportunities such as past ties, undervalued assets, access to technology. 25 A very wide distribution 23 UNCTAD (2006), World Investment Report 2006: FDI from Developing and Transition Economies – Implications for Development; Yang Yao and Ying He (2005), Chinese Outward Investing Firms (a study for FIAS/IFC/MIGA), China Centre for Economic Research, Peking University (mimeo). 24 It is likely that quite a lot of FDI in Hong Kong is a stepping stone to investments further afield – and some in China itself, i.e. an example of “round-tripping”. 25 OFDI patterns are seldom established during a country’s early period of internationalization and can change remarkably from year to year because each new investment can potentially be a sizeable proportion of the total OFDI stock.
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