Global Players from Emerging Markets: Strengthening ... - Unctad

a formidable competitive threat in their heartlands
– they must find the resources to compete in order to
survive. Since many resources needed (technologies,
purchasing or honing brands, even cheap-skilled
labour resources) are found overseas, this has resulted
in a rapid internationalization of Chinese companies.
The relatively early internationalization by Chinese
companies may also, partly, explain the possibly low
levels of OFDI by SME TNCs, which are less likely
to have built up the assets for internationalization at
an early stage in a country’s development.
These aims, drivers and motives in consequence
explain the main industries in which Chinese TNCs
are investing. The investments in petroleum, gas
and minerals follow from the need to secure raw
materials for the Chinese economy; the concentration
of manufacturing FDI in computer, IT and software
(electronic) industries are a little more unexpected –
save for the fact that these are among the industries in
which foreign TNCs have made the most inroads and
therefore represent the greatest competitive threat to
Chinese companies. Having said this, these industries
in China are in essence the result of FDI by foreign
TNCs in China, thereby establishing the conditions
for Chinese companies to respond/develop; indeed,
many Chinese TNCs affected entry into electronic/
electrical in alliance, partnership or linkage with
foreign TNCs in China itself (again in some, but
not complete, contrast to Japan, the Republic of
Korea, India and the Russian Federation). The major
expansion of Chinese TNCs into the world economy
has occurred at a time when alliances and partnerships
are common. Moreover, inasmuch as Chinese TNCs
are already working with foreign companies in China
itself, they are already familiar, to a degree, with
international partnerships, which they have taken
further through M&As. Of course, this familiarity
with international alliances and partnerships, allied to
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a considerable use of them in the international domain
does not ensure their effective use (though examples
mentioned earlier, such as Haier, do indicate some
level of success); and certainly research is needed to
determine the situation and recommend options and
policies.
A number of policy implications can be
highlighted. First, there is a pressing need to
improve data gathering, analysis and reporting on
OFDI; without timely and suitable data it will not
be possible to pursue appropriate policies or offer
support to companies. Secondly, the data gathering
instruments must urgently include SMEs within their
framework; as discussed earlier there is a dearth of
knowledge on Chinese SME TNCs and their OFDI.
Thirdly, there is a need for a more coherent policy
approach to Chinese OFDI, a better reflection of
this in the country’s legislation and, perhaps, some
support for OFDI activities (especially for SMEs).
Fourthly, although this requires a fuller assessment of
the issues, there may be a case for a Chinese OFDI
promotion agency, especially because of the diverse
nature of Chinese TNCs, their differential needs and
the need to orchestrate the activities of a wide range
of national, provincial and municipal authorities and
their policies.
Finally, because Chinese OFDI and TNCs
have only recently emerged onto the global scene,
very little is known about them (apart from some case
studies), whether their modus operandi are similar or
different from other TNCs, indeed whether there is
such a thing as “typical” Chinese TNCs, etc. Given
the importance of the Chinese economy, the rising
scale of Chinese OFDI and the lessons that these
companies might hold for TNCs from other emerging
economies, it is urgent that a research agenda be
established and implemented.