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Contents 

List of Figures vii 

ListofTables ix 

Foreword xii 

Acknowledgments xiii 

Notes on Contributors xv 

Introduction 1 

Ilan Alon, Marc Fetscherin, and Philippe Gugler 

Part I Macro-Environmental Determinants of 

Chinese FDI 

1 An Institutional Perspective and the Role of the State for 

Chinese OFDI 11 

Bing Ren, Hao Liang, and Ying Zheng 

2 Home Country Macroeconomic Determinants of Chinese 

OFDI 38 

William Wei, Ilan Alon, and Liqiang Ni 

3 The Role of Country of Origin and Chinese OFDI 54 

Paz Estrella Tolentino 

4 Chinese SWFs: At the Crossroad between the Visible and the 

Invisible Hand 81 

Michael Keller and Laura Vanoli 

Part II Micro-Environmental Determinants of 

Chinese FDI 

5 Motives and Patterns of Reverse FDI by Chinese 

Manufacturing Firms 107 

Xiaobo Wu, Wanling Ding, and Yongjiang Shi 

6 A Two-way Causal Link between Internationalization and CEO 

Equity Ownership in Chinese Firms 122 

Xiaohui Liu and Jiangyong Lu 

v 

PROOF

vi Contents 

7 Effects of Absorptive Capacity on International Acquisitions 

of Chinese Firms 137 

Ping Deng 

Part III Chinese FDI in Europe and North America 

8 Push and Pull Factors for Chinese OFDI in Europe 157 

Yun Schüler-Zhou, Margot Schüller, and Magnus Brod 

9 The Rise of Chinese OFDI in Europe 175 

Jan Knoerich 

10 Chinese M&A in Germany 212 

Yipeng Liu and Michael Woywode 

11 Chinese SMEs in Prato, Italy 234 

Anja Fladrich 

12 Chinese State-Controlled Funds and Entities in Canada 257 

Xiaohua Lin and Qianyu Chen 

Part IV Chinese FDI in Africa 

13 Chinese OFDI in Africa: Trends, Prospects, and Threats 279 

Gayle Allard 

14 Chinese OFDI in Sub-Saharan Africa 300 

Raphael Kaplinsky and Mike Morris 

Part V Cases of Chinese FDI 

PROOF 

15 The Case of Florida Splendid China 329 

Wenxian Zhang 

16 Benelli and Q J Compete in the International Motorbike Arena 355 

Francesca Spigarelli, William Wei, and Ilan Alon 

17 Geely’s Internationalization and Volvo’s Acquisition 376 

Marc Fetscherin and Paul Beuttenmuller 

Final Reflections 391 

Ilan Alon, Marc Fetscherin, and Philippe Gugler 

Author Index 396 

Subject Index 405

1 

An Institutional Perspective 

and the Role of the State for 

Chinese OFDI 

Bing Ren, Hao Liang, and Ying Zheng 

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). 

11 

PROOF

12 Macro-Environmental Determinants of Chinese FDI 

To answer these questions one must examine the driving forces of Chinese 

firms’ internationalization, especially the institutional forces and the role of 

the state that the literature has not yet explored. As China’s economic development 

involves a high degree of state involvement, it constitutes a unique 

institutional foundation that shapes OFDI trajectories at the level of both 

the country and the firm. Integrating the recent literature on how formal 

and informal institutions such as state policies and national pride influence 

the OFDI of emerging market enterprises (EMEs) (e.g., Buckley, Clegg, 

Cross, Lin, Voss, & Zheng, 2007; Buckley, Cross, Tan, Liu, & Voss, 2008; Luo, 

Xue, & Han, 2010; Hope, Thomas, & Vyas, 2011), we argue that the fast 

growth of China’s OFDI is a consequence of the state’s involvement and 

formal and informal institutional motivating forces. We define the formal 

institutional drivers as governmental policy, the bureaucratic administrative 

system, and the government ownership arrangement in firms. Informal 

institutions include the state ideology and national pride (Hope et al., 2010). 

Driven by these institutions, Chinese firms are highly motivated to conduct 

OFDI for country-level political and economic objectives, or for firm-level 

global competence. 

The importance of this study is as follows. Most studies on international 

business have focused on OFDI by mature market enterprises through studying 

the motivations, processes, and outcomes of their internationalization 

(Johanson & Vahlne, 1977; Hennart, 1982; Dunning, 1988; Dore, 1990). 

More recent studies explore the motivations for internationalization of EMEs 

(Luo & Tung, 2007; Witt & Lewin, 2007; Rui & Yip, 2008). However, except 

for a few studies (e.g., Buckley et al., 2008; Luo et al., 2010), the role of 

the state in the OFDI of EMEs is largely ignored. Similarly, among the studies 

emphasizing the institutional perspective of EMEs’ internationalization, 

there is no in-depth discussion of how macro-level institutional foundations 

shaped by the state could influence micro-level firm strategic choices. Our 

study helps fill these gaps by analyzing the specific roles of the state and 

the broader economic and social contexts that may influence how the state 

performs its role. We also analyze how these state institutions might become 

sources of comparative ownership advantages and help shape Chinese firms’ 

OFDI trajectories. 

The remainder of the chapter is organized as follows. Section 1 reviews 

the literature. In Section 2 we analyze the role of the state and the formal 

and informal institutions by looking at their influence on Chinese firms’ 

OFDI motivations and strategies. We also discuss contingency views of our 

theoretical propositions and provide our conclusions. 

1. Literature review 

PROOF 

1.1. Motivations for OFDI 

There is a vast literature examining the motivations for FDI (see Meyer & 

Nguyen [2005] for a survey). The theory of capital movements suggests that

PROOF 

Bing Ren et al. 13 

FDI is a part of the firm’s portfolio investments (Iversen, 1935; Aliber, 1971). 

Hymer (1960), Kogut and Zander (1993) argue that FDI is a means of transferring 

knowledge and other tangible and intangible firm assets to organize 

production overseas. Vernon (1966) uses the concept of product lifecycle 

to theorize that firms set up production facilities abroad for standardized 

mature products in their home markets. Other literature sees FDI as a motive 

for risk diversification (Rugman, 1981) and a bandwagon effect exhibited by 

MNEs when they follow their rivals into new markets as a strategic response 

to oligopolistic rivalry (Knickerbocker, 1973). 

The international business (IB) literature, especially Dunning’s OLI 

paradigm, sees OFDI as a primary means by which firms can appropriate 

rents in overseas markets by exploiting their idiosyncratic resources 

and capabilities (Dunning, 1958; Caves, 1971). The internalization theory 

(McManus, 1972; Buckley & Casson, 1976; Rugman, 1981; Hennart, 

1982) sees OFDI as a way to reduce the transaction costs associated 

with coordinating activities across national boundaries, while the resourcebased 

view (Lippman & Rumelt, 1982; Dierickx & Cool, 1989; Teece, 

Pisano, & Shuen, 1997) argues that firms enter foreign markets to create 

value. The literature suggests that the OFDI of EMEs is different from 

that of enterprises from developed economies (e.g., Makino, Lau, & Yeh, 

2002). 

Studies on comparative ownership and governance suggest that the 

unique mode of governance and control in emerging economies is particularly 

important in determining the OFDI decision (Claessens, Djankov, & 

Lang, 2000; Filatotchev, Strange, Piesse, & Lien, 2007). Other studies on 

EME international strategy emphasize the institutional perspective (e.g., 

Tihanyi, Griffith, & Russell, 2005; Witt & Lewin, 2007; Dunning & Lundan, 

2008; Peng, Wang, & Jiang, 2008; Seyoum, 2009; Ge & Ding, 2011), suggesting 

that institutions, both formal and informal, influence EME OFDI 

behavior – either through positive or negative effects (Luo & Tung, 2007; 

Witt & Lewin, 2007). Formal institutions, such as policy, influence EME outward 

investment: this has been manifested in the home and host country 

markets (e.g., Loree & Guisinger, 1995; Lien, Piesse, Strange, & Filatotchev, 

2005; Buckley et al., 2008; Seyoum, 2009; Luo et al., 2010). Informal institutions 

may determine OFDI flows and strategies such as choice of location 

and entry mode (Buckley et al., 2007; Elango & Pattnaik, 2007; Yiu, Lau, 

& Bruton, 2007; Lu & Ma, 2008). Examples include institutional distance 

or cultural proximity between the home and host country markets (e.g., 

Buckley et al., 2007; Seyoum, 2009), and host and home country business 

networks. Formal and informal institutions together may influence 

OFDI strategy in a more dynamic way (Dunning & Lundan, 2008; Peng et al., 

2008). 

Chinese firms that invest abroad, especially large multinationals, are 

typically state-owned or state-controlled. Recent studies on Chinese and 

Indian multinational cross-border M&As reveal that SOEs constitute a bigger


proportion among the main players conducting cross-border M&As in China 

thaninIndia(Sunet al., 2010). As China’s global push accelerates, many 

observers believe that institutional factors should act as advantages for generating 

more aggressive OFDI activities (Luo et al., 2010; Sun et al., 2010), 

which is usually not the case for mature market economies (Dunning, 1988; 

Gomes-Casseres, 1990; Hennart & Park, 1994). Many even suggest that 

Chinese firms’ OFDI is to a large extent designed to follow the state’s policy 

guidance, especially now (Child & Rodrigues, 2005; Buckley et al., 2007; 

Boisot & Meyer, 2008; Deng, 2009; Sutherland, 2009; Yao & Sutherland, 

2009; Luo et al., 2010). Chinese OFDI trajectories are likely shaped by 

the specific institutional regime developed under the state, although little 

research on the topic exists. 

2. Framework 

PROOF 

2.1. The role of the state 

To some extent, China is still a state-controlled political economy where the 

state plays a dominant role in driving economic transactions and performance 

(Chang, 1994; Deng, 2004; Dunning & Pitelis, 2009; Huang, 2010; 

Nee, 2010). The state designs and influences formal institutions and regulates 

economic and business activities through the formal policy at the 

central and local government levels. The state also establishes the administrative 

system and arranges government ownership within various industrial 

sectors. The state helps shape informal institutional frameworks such as 

firm–government relationships, political connections and inter-bureau or 

inter-firm network ties that influence business behavior (Peng & Heath, 

1996; Xin & Peace, 1996; Keister, 1998; Yiu et al., 2007). The rise of China 

on the global political and economic stage cultivates the role of the state in 

shaping China’s national pride and ideology. 

The state’s role is even more significant when considering the wider economic 

and social context into which China has stepped. China is now facing 

both external and internal pressure to develop better and stronger economic 

and social systems. Internally, the state faces pressure to enhance national 

wealth. Although the economy has sustained a high growth rate in the past 

several decades, the government is yet not sure about the sustainability of 

future growth. Externally, China’s economy and society now depend heavily 

on other economies and societies, for more successful participation in the 

global economic and social stage. 

The Chinese state has aimed to develop both hard and soft power for 

coping with these challenges and to construct long-term development 

goals (‘The Economic Observer’ [in Chinese], May 31, 2010). The state has 

tried to maintain strategic control over national-level formal and informal 

institutional development.

PROOF 


2.2. Formal institutional regime 

Policy 

The Chinese government has, to a great extent, played a crucial role in shaping 

the structure of China’s approved outward investment through external 

policy influence. However, the OFDI policies went through an evolutionary 

process. According to Luo et al. (2010) and others such as Buckley et al. 

(2008), Chinese OFDI policies moved through three major phases: the initiation 

of OFDI policy; the enrichment of the institutional frameworks; and 

setting up ‘going global’ as a country-level strategy. 

In Phase 1 (1979–1990), the Chinese state played a key role in initiating 

the OFDI policies. In 1979, with the launch of the ‘open door’ policy 

by Deng Xiaoping, the State Council came up with the concept of ‘setting 

up enterprises overseas’ (Zhao, 2007, p. 56). The state issued concrete 

policies and principles to guide OFDI. In 1984, the Ministry of Foreign 

Trade and Economic Cooperation (MFTEC, today’s MOC) released the first 

regulations on OFDI, called ‘Circular concerning approval authorities and 

administrative principles for opening up non-trade joint venture overseas’. 

The State Administration of Foreign Exchange (SAFE) also published the first 

regulations on administration of foreign exchange: ‘Measures for foreign 

exchange control relating to overseas investment’ (1989). Since then, a primary 

structure of policy and administration of OFDI was established. During 

this period, the Chinese government was perceived as taking the plunge in 

OFDI activities. 

In Phase 2 (1991–2000), the Chinese state enriched the institutional 

framework of OFDI policy. On 12 October 1992, Jiang Zemin, the representative 

of third-generation leaders of the Chinese Communist Party, gave a 

report to the Fourteen Chinese Communist National Congress, emphasizing 

the deepening of reform and opening up policy to ‘expand OFDI and multinational 

operations of Chinese enterprises’ (Jiang, 1992). Following Jiang’s 

talk, more specific and detailed provisions were added to formulate the regulatory 

and administrative system on firms’ OFDI activities. For example, the 

Administration of Overseas Investment Projects (National Planning Commission 

[NPC], March 1991) normalized the approval procedure and gave 

more specific requirements for OFDI. 

In Phase 3 (2001–present), the state set the ‘Going Global’ policy as a 

country-level strategy to enhance competitive advantages through OFDI 

strategies. The Chinese government initiated the ‘going abroad’ policy 

as country-level strategy in 2000. (This was reflected in ‘Suggestion on 

Constructing the 10th Five Year Plan for National Economic and Social 

Development’.) 

In 2003, the State Development and Reform Commission (SDRC) specified 

the boundaries for key OFDI projects, including: (1) seeking natural 

resources in areas where China is lacking; (2) investing in manufacturing


PROOF 

that promotes export of technologies, products, and equipment; (3) setting 

up R&D collaborative projects which could bring in advanced technologies, 

managerial experience, and specialized talents; (4) conducting M&As to 

increase international competitiveness and market exploration of firms. 

The Chinese government encouraged firms to pursue the above projects to 

upgrade firm-level competence. 

In the meantime, joining the World Trade Organization demanded a 

higher level of openness, and this also encouraged the Chinese government 

to modify the existing strict policies to create a friendlier institutional environment 

for OFDI. For example, the central state deregulated investment 

approval and foreign exchange controls. The government provided support 

for finance, credit, and insurance (Enterprise Institute of Development 

Research Center of the State Council, 2006) and strengthened supervision 

of multinational operating performance to monitor the effectiveness of the 

‘go global policy’. Table 1.1 provides a detailed illustration of major policies 

released by the state on Chinese firms’ OFDI. 

Five important institutional elements are particularly emphasized by the 

state and successfully advanced the OFDI of Chinese firms. The first institutional 

element refers to the approval process. The state streamlined the 

approval procedure and decentralized approval authority for OFDI. The state 

relaxed foreign exchange control gradually, especially in the examination of 

capital resource and exchange risks. In providing concrete investment support, 

the state supported investment projects for credit, capital, information, 

subsidies, and tax collection. The state also aimed to set up more efficient 

supervision mechanisms on post-investment performance of OFDI enterprises. 

Lastly, the state has been seeking better international protection for 

firms’ overseas investment through setting up bilateral investment treaties 

and multilateral and regional protection mechanisms (for more straightforward 

descriptions of the five institutions’ evolution, see Figures 1.1a–1.1e). 

Bureaucratic administration 

Bureaucratic administration policy is usually made by important players in 

particular bureaucratic systems, and important operating systems are also 

implemented by the administrators to utilize the policy effect. In general, 

the bureaucratic administration related to Chinese OFDI is complex due to 

the multiple bureaucratic players involved in decision-making, regulation 

and, supervision for OFDI. In the bureaucratic administration system, the 

first layer is the State Council, which plans China’s overall OFDI for the long 

term. Under the leadership of the State Council, the State Development and 

Reform Commission (SDRC, formerly the National Planning Commission) 

is the major institution of the second layer responsible for studying and 

advancing strategies and plans for OFDI, and examining the optimization of 

the policies. Guided by the strategic plan of the SDRC, the Department of

Table 1.1 The policy regime of China’s OFDI 

Examination 

and 

approval 

Key policy Key point 

Approval Authorities and 

Administrative Principles 

for Opening up Non-trade 

Joint Venture Overseas 

(MFTEC, May 1984) 

Approval Procedures for 

Setting up Overseas 

Subsidiaries (MFTEC, July 

1985) 

Administration and 

Approval of Establishing 

Non-trade Enterprises 

Overseas (MFTEC, July 

1985) 

Administration of 

Overseas Investment 

Projects (NPC, March 

1991) 

Verification and Approval 

Procedures for 

OFDI (SNRC, October 

2004) 

Examination and 

Approval of Investment to 

Run Enterprises Overseas 

(MOC, October 2004) 

PROOF 

17 

1. Authorize MFTEC to approve OFDI; 

prior to this, all OFDI has to be 

approved by State Council 

2. Major projects concerning resource 

and projects exceeding 

US$10 million to be approved by 

State Council 

3. Projects concerning state property to 

be approved by NPC and METEC 

Opens OFDI for all economic entities 

with financial resources, foreign 

joint venture partners, and relevant 

capabilities 

1. Approval result should be handed 

down in no more than 3 months 

2. Chinese OFDI should focus on using 

overseas technologies, resources, and 

markets 

1. Projects exceeding 1 million to be 

approved by NPC, exceeding 

30 million to be approved by the 

State Council. 

2. Projects concerning state-owned 

assets must be approved by State 

Council 

3. Project proposals, feasibility reports, 

corporate contracts, and articles 

should be provided by OFDI 

enterprises 


down in no more than 60 days 

1. Projects exceeding US$10 million to 

be approved by SNRC (except 

projects concerning resources), 

exceeding US$50 million approved 

by State Council 


down in no more than 20 days 

1. All companies are permitted to run 

enterprises overseas 

2. Project proposals, feasibility reports 

are substituted by project application 


down in no more than 15 days

18 

Table 1.1 (Continued) 

Foreign 

exchange 

control 



OFDI (MOC, May 2009) 

Foreign Exchange 


Overseas Investment 

(SAFE, March 1989) 

Supplemental Provisions 

on Administration 

Measures on Foreign 

Exchange for Overseas 

Investment (SAFE, 

September 1995) 

Canceling the Deposits 

that Guarantee Profits 

from Investments 

Abroad (SAFE, 

November 2002) 

Simplifying 


Administration Relating 

to OFDI (SAFE, March 

2003) 

Further Measures on 


Administration 

Stimulating OFDI (SAFE 

May 2005) 

Administration 

Measures on Foreign 

Exchange for Overseas 

Investment (SAFE, 2009) 

PROOF 

Projects exceeding US$100 million 

to be approved by MOC 

1. SAFE evaluates the source of 

funds to be invested abroad as 

well as the foreign exchange risk 

2. Five percent of the OFDI sum 

has to be deposited in a special 

account 

3. Profit earned abroad should be 

remitted back to China 

Chinese investors are allowed to 

purchase foreign exchange for an 

OFDI project; prior to this, a 

Chinese investor had to earn the 

foreign exchange 

Deposits that guarantee profits are 

no longer needed 

1. SAFE will only investigate 

domestic foreign exchange 

sources 

2. Foreign exchange obtained from 

a source outside of mainland 

China no longer examined 

1. Local SAFE named as authority 

on OFDI projects with a higher 

threshold (from US$3 to US$10 

millions) all over the country 

2. Total foreign exchange available 

for all investors is increased from 

USD3.3 to USD5 billion 

The necessary foreign exchange for 

the domestic investors to invest 

abroad may be self-owned foreign 

exchange, the foreign exchange 

purchased by RMB or entity, 

intangible assets, the domestic and 

overseas foreign exchange loans, 

and other permitted source

Inspection 

and 

evaluation 

Guidance 

and support 

International 

investment 

protection 

mechanism 

Interim Measures for the 

Joint Annual Inspection 

of Overseas Investments 

(MFTEC, October 2002) 

Measures for 

Comprehensive 

Assessment of 

OFDI Performance 

MFTEC (October 2002) 

Annual Report System on 

Operational Obstacles in 

Major Target Countries 

(MOC, November 2004) 

Providing Credit Support 

to Key OFDI Projects 

Encouraged by the State 

(SNRC, May 2003) 

Guiding Directories 

of Target Nations 

and Industries for 

OFDI (MOC, July 2004; 

MOC, October 2005; 

MOC, January 2007) 

Using and Managing 

Special Funds for Foreign 

Economic Cooperation 

(MOC; MOF, December 

2005) 

Bilateral Investment 

Treaty 

PROOF 

19 

Provides post-investment evaluation 

of OFDI projects 

Clarification of standards and 

procedures for evaluating 

OFDI projects which have been 

operating overseas 

Using annual reports from 

enterprises investing abroad, MOC 

collects all kinds of obstacles 

and problems confronted by 

OFDI companies 

OFDI projects fulfilling specified 

requirements will be provided with a 

lower lending rate credit fund 

Provides industries and countries 

information for enterprises to 

conduct investment encouraged by 

the state through preferential 

treatment concerning funding, tax 

collection, foreign exchange, 

customs and others 

1. Sets up special funds to 

encourage Chinese enterprises to 

invest abroad 

2. Special funds may be used to 

support foreign economic 

cooperation by the following 

means: (1) subsidies for 

pre-operational fees; (2) interest 

discounts for medium- and 

long-term loans; (3) subsidies for 

operational fees 

1. In 1980s, China signed BITs with 

most developed countries, but in 

this period, most treaties are 

raised by developed countries to 

protect their investment in 

China 

2. In 1990s, China began to 

conclude BIT positively with 

developing countries to protect 

investment in these countries

20 



Multilateral investment 

protection measures 

Regional protection 

mechanism 

Sources: www.mofgov.com; He (2009); Luo et al. (2010). 

1985 

Approval procedures for setting 

up overseas subsidiaries 

1985 

1991 

Administration and approval 

of establishing non-trade 

enterprises overseas 

1984 

Approval and administration 

of non-trading overseas enterprises 

1991 

Approval authorities and Examination and approval 

administrative principles for opening up of OFDI project proposals 

non-trade joint venture overseas and feasibility reports 

Acceding to WTO in 2001, China could 

enjoy the multilateral investment 

protection provided by agreements 

abided by WTO members, such 

as, Agreement on Trade-Related 

Investment Measures (TRIMS), General 

Agreement on Trade in Services (GATS) 

China-ASEAN Free Trade Area, founded 

in 2002, providing adequate protection 

to investment in this area, benefits 

more and more investors both from 

China and ASEAN 

2004 

Examination and approval of investment to 

run enterprises overseas 

2004 

Verification and approval 

procedures for OFDI 

2003 

Reply on decentralization authority 

reforming pilot of non-trade 

investment overseas approval 

2009 

Administration of OFDI 

Initial regulations on OFDI 

Normalization of the approval and Further procedure simplification 

Strict examination of projects 1990 administration system 

and decentralization of authority 

1979 2000 

2009 

Highly centrally controlled authority 

Decentralization of authority Relaxed examination of projects 

Figure 1.1a Evolution of state’s examination and approval processes for China’s OFDI 

1990 

Rules for implementation of measures on 

foreign exchange control in investment abroad 

2002 

Canceling the deposits that guarantee 

profits from investments abroad 

1989 

1993 

Procedural and approval standards on 

OFDI-related foreign exchange 

Opening special account of 

risks and capital resources 

deposits that guarantee profits 

1995 

1989 

Foreign exchange administration 

of overseas investment 

Supplemental provisions on 

administration measures 

on foreign exchange 

for overseas investment 

2005 

Enlarging the reform pilots regarding 

the administration of foreign 

exchange for overseas investment 

Rules for implementation of 

measures on foreign exchange 

control in investment abroad 2009 

Administration measures on 

foreign exchange for 

2003 

overseas investment 

Simplifying foreign exchange 

administration relating to OFDI 

Rigid control on capital resource and 

More standard control on foreign Streamlining the examination on 

1979 

foreign exchange risk 

Profit deposits are required 

exchange risk, source of investment 

1990 

2000 

fund Chinese investors are allowed to 

risk and capital resource, 

canceling deposits and 

2009 

purchase foreign exchange 

decentralization authority. 

Figure 1.1b Evolution of state’s foreign exchange control for China’s OFDI 

2003 

PROOF


2004 

2005 

Guiding directories of target 

Notice on adjusting the management 

2000 nations and industries for OFDI 

mode of overseas financial guarantees 

for overseas investment enterprises 

2005 

Measures of capital support for 

2004 

small and medium enterprises to 

Providing more financing support 

develop international markets 

Notice on setting up a risk to key overseas-invested projects 

1999 

prevention mechanism for key 

overseas investment projects 

Guidance on granting credit 

2003 

2005 

for overseas processing Providing credit support to key OFDI 

Using and managing special funds 

and assembling 

projects encouraged by the state 

for foreign economic cooperation 

1979 2000 

Support on capital, credit, and finance, guidance on target 

nations and industries are provided to encourage OFDI 

2009 

Figure 1.1c Evolution of state’s inspection and evaluation processes for China’s OFDI 

2002 

2003 

Circular on setting up an information 

Measures for comprehensive bank of overseas investment 2004 

assessment of OFDI performance intention of enterprises Annual report system on 

operational obstacles 

2002 

Interim measures for the joint annual 

inspection of overseas investments 

2002 

Provisions on statistical 

report of OFDI 

in major target countries 2005 

Report requirements for overseas 

mergers and acquisitions 

Annual inspection, comprehensive assessment, and other report systems are set up 

1979 2000 2009 

Figure 1.1d Guidance and support on China’s OFDI by state 

PROOF 

1985 

2000 

First BIT with developing countries 

Signed BIT with 54 

1996 

1982 Thailand 

developing countries by 2000 

Signed BIT with most 

2004 

First BIT with developed countries developed countries by 1996 

2001 China-ASEAN 

Sweden 

WTO free-trade area 

1979 

As investment host country, most BITs As investment output country, most BITs 

were concluded with developed countries were concluded with developing countries 

Seeking multilateral and 

regional protection 2009 

1990 

2000 

Figure 1.1e Evolution of China’s international investment protection mechanism 

Foreign Capital and Overseas Investment drafts the catalogs of guidance for 

foreign investment industries, and approves key OFDI projects. The Ministry 

of Commerce, formerly the Ministry of Foreign Trade and Economic Cooperation 

and Ministry of Domestic Commerce, is the primary government 

unit responsible for conducting multilateral negotiations on investment and 

trade treaties. Finally, the Department of Outward Investment and Economic 

Cooperation drafts concrete regulations on OFDI and administrates and 

supervises OFDI. 

Other important governmental departments in the second layer include 

the People’s Bank of China, which is responsible for making monetary policy 

and foreign exchange policy; the Ministry of Foreign Affairs, responsible for


drafting the catalog for guiding the target countries of OFDI in cooperation 

with other agencies; and the Ministry of Finance and Ministry of Taxation, 

responsible for drafting policies of taxation related to OFDI. The Ministry of 

Taxation is also responsible for providing financial support to OFDI through 

special funds. A special organization, the State-owned Assets Supervision 

and Administration Commission, was established under the State Council to 

manage and supervise the national state-owned assets in the non-financial 

sectors, including those that invest in overseas markets. 

In the third layer are several departments and units that implement the 

policies made by the above authorities. For example, the State Administration 

of Foreign Exchange helps supervise and check the authenticity 

and legality of the receipts and payments involved in OFDI and regulates 

management of overseas foreign exchange accounts. Three policy-oriented 

financial institutions help to provide credit and insurance for OFDI firms: 

these include the China Development Bank, the Export-Import Bank of 

China, and the China Export & Credit Insurance Corporation. Figure 

1.2 and Table 1.2 illustrate the Chinese OFDI bureaucratic administration 

system. 

The government ownership 

The third formal OFDI institutional regime relates to the wide presence of 

government ownership of firms in the economy. Since market reform in the 

late 1970s, the Chinese government has maintained control of the economy. 

The central and local government bureaux provide funding to the SOE 

Ad hoc 

organizations 

SASAC 

SOE 

State council 

SDRC MOC PBC MOF MFA 

DFCOI DOIEC SAFE 

MOT 

CECIE 

PROOF 

Policy financial 

institution 

EIBC CDB 

Figure 1.2 Bureaucratic system in regulating China’s OFDI 

Notes: MOC – Ministry of Commerce; DOIEC – Department of Outward Investment and Economic 

Cooperation; SDRC – State Development and Reform Commission; DFCOI – Department 

of Foreign Capital and Overseas Investment; MFA – Ministry of Foreign Affairs; MOF – Ministry 

of Finance; PBC – People’s Bank of China; SASAC – State-Owned Assets Supervision and Administration 

Commission; MOT – the Ministry of Taxation; SAFE – State Administration of Foreign 

Exchange; SOE – State-Owned Enterprise; EIBC – Export-Import Bank of China; CDB – China 

Development Bank; CECIE – China Export & Credit Insurance Corporation. 

Sources: www.gov.cn; www.mofcom.gov.cn; zcq.mofcom.gov.cn; www.sdpc.gov.cn (2010).

Table 1.2 The bureaucratic administration regime of China’s OFDI 

Department Main functions 


State council 1. Blueprinting China’s overall OFDI in the long term 

MOC 1. Bilateral and multilateral negotiations on investment and 

trade treaties 

DOIEC 1. Drafting concrete regulations on OFDI 

2. Administrating and supervising OFDI activities 

3. Examining and verifying non-financial enterprises’ OFDI 

4. Statistics for OFDI 

SDRC 1. Studying and putting forward strategies and plans for OFDI 

2. Studying policies concerning aggregate balance and 

structural optimization 

DFCOI 1. Drafting the Catalogue for the Guidance of Foreign 

Investment Industries in cooperation with relevant agencies 

2. Examining and approving key OFDI projects, major 

resources related and consuming substantial amount of 

foreign currency 

SAFE 1. Supervising and checking the authenticity and legality of 

receipts and payments 

2. Regulating management of overseas foreign exchange 

accounts 

SASAC 1. Managing and supervising the nation’s state-owned assets in 

non-financial sectors 

MFA 1. Drafting the Catalogue for the Guidance of Foreign 

Investment Countries in cooperation with relevant agencies 

MOF 1. Providing financial support to OFDI though special fund, etc 

2. Drafting policies of taxation related to OFDI in cooperation 

with MOT 

MOT 1. Drafting policies of taxation related to OFDI in cooperation 

with MOF 

PBC 1. Designing the monetary and foreign exchange policy, etc 

EIBC; CDB 1. Providing credit for OFDI firms as policy banks 

CECIE 1. Providing insurance for OFDI firms as policy insurance 

corporation 

Source: www.gov.cn 

PROOF 

sector; the state also directs funds to SOEs via state-owned banks. As the 

market economy develops further, SOEs seek financing from domestic and 

international financial markets. Through listing their stocks on the stock 

exchange markets, SOEs are transformed into corporations and joint stock 

companies. In a joint stock company, government ownership comprises 

one type of shares and, as the dominant shareholder, the state exerts tight 

control over both political and economic objectives. For example, SOEs are


Foreign investment enterprise 

Joint stock company 

0.5% 

5.6% 

Enterprise funded from 

Joint equity cooperative 

enterprise 

1.0% 

Limited liability company 

22.0% 

Others 

0.3% 

Private enterprise 

1.0% 

PROOF 

Hongkong, Macao, Taiwan 

0.1% 

Collectively owned enterprise 

0.3% 

State owned enterprise 

69.2% 

Figure 1.3 Chinese OFDI stocks’ distribution by different types of investors (2009) 

the main players in OFDI, relative to other types of enterprises, and behave 

aggressively in their internationalization. Figure 1.3 describes the presence 

of SOEs within Chinese OFDI. Table 1.3 lists the top 50 SOEs ranked by 

FDI outflow. 

SOEs, in their drive toward globalization, have encountered strong criticism 

from global stakeholders for their lack of accountability, transparency, 

and trustworthiness (Pistor and Xu, 2005; Luo & Tung, 2007; Li, 2009). 

When Chinese SOEs invest overseas, their strategies may be purely economic, 

such as maximizing profits, or they may include political goals 

that take priority over economic ones. In fact, the influence of the state 

and adoption of the administrative governance framework in SOE business 

activities make economic efficiency largely unclear. The literature 

argues that the highly concentrated ownership gives the state substantial 

discretionary power to use the resources of companies and results in problems 

such as insider control and the exploitation of minority shareholder 

interests (Young, Peng, Ahlstrom, Bruton, & Jiang, 2008). Control by the 

government may also create a fertile soil to nurture corruption (Luo & 

Tung, 2007). A recent study suggests that the newly transformed SOEs are 

‘dynamic dynamos’ rather than ‘dying dinosaurs’ (Ralston, Tong, Terpstra, 

Wang, & Egri, 2006), suggesting that government ownership may influence 

the performance of Chinese firms positively, including OFDI. 

2.3. Informal institutional regime 

The state also plays a role in cultivating, advocating, and strengthening 

informal institutions to enhance its economic and political objectives 

through OFDI. Except for the formal institutional frameworks discussed 

above, informal institutions – especially when non-existent or non-enforced 

legal systems fail to support business – influence firms’ overseas investments.

Table 1.3 Top 50 non-financial Chinese enterprises ranked by OFDI stocks (2009) 

No. Enterprise name Main business Firm type 

1 China National 

Petroleum Corporation 


Offshore Oil 

Corporation 

3 China Petrochemical 

Corporation 

4 Aluminium 

Corporation of China 

5 China Resources 

(Holdings) Co., Ltd. 

6 China Ocean Shipping 

(Group) Company 


Cereals, Oils & 

Foodstuffs Corporation 

Crude oil and gas 

exploitation, petroleum 

refining, engineering 







Bauxite, rare-earth metal, 

engineering 

Consumer goods, power, 

property, cement, gas, 

medication, finance 

Water transportation, 

shipbuilding, logistics 

Foodstuffs, grain and oil, 

hotel, real estate 

8 Sinohem Corporation Oil, fertilizer, gas, hotel, real 

estate 

9 China Merchants 

Group 


Aviation Holding 

Corporation 

11 China Shipping 

(Group) Company 

Transportation, 

infrastructure, finance, real 

estate 

25 

Centrally controlled 

SOE 


SOE 


SOE 


SOE 


SOE 


SOE 


SOE 

SOE 


SOE 

Air transportation Centrally controlled 

SOE 

Water transportation, 

shipbuilding, logistics 


SOE 

12 SinoSteel Corporation Metallurgy, engineering Centrally controlled 

SOE 

13 SINOTRANS 

Changjiang National 

Shipping (Group) 

Corporation 

14 China Minmetals 

Corporation 

Transportation, recreation, 

real estate 

Metal and mineral, 

transportation 

15 CITIC Group Finance, real estate, 

engineering, resource, 

manufacture, information, 

commercial service 

PROOF 


SOE 


SOE 

Limited liability 

company

26 


No. Enterprise name Main business Firm type 

16 China Unicom 

Corporation 

17 China State Construction 

Engineering Corporation 

18 China Power Investment 

Corporation 

Telecommunications Centrally controlled 

SOE 

Civil construction Centrally controlled 

SOE 

Electric power, 

investment, engineering 

19 China Huaneng Group Electric power, finance, 

resource, finance 

20 China National Chemical 

Corporation 

21 China Mobile 

Communications 

Corporation 

22 China Metallurgical 

Group Corporation 

23 Shum Yip Holdings 

Company Limited 


SOE 


SOE 

Chemical engineering Centrally controlled 

SOE 

Telecommunications Centrally controlled 

SOE 

Metallurgy, resource, real 

estate, engineering 

Real estate, infrastructure, 

transportation 


SOE 

Locally controlled 

SOE 

24 Legend Holdings Ltd. IT, investment, real estate Limited liability 

company 

25 Hunan Valin Iron & Steel 

(Group) Co., Ltd. 

Iron and steel Limited liability 

company 

26 GDH Limited Investment Locally controlled 

SOE 

27 Huawei Technologies Telecommunication 

service 

28 China Noferrous Metal 

Mining & Construction 


29 China Norh Industries 


30 Baosteel Group 

Corporation 

31 Shanghai Baosteel Group 

Corporation 

32 Shanghai Overseas United 

Investment Co., Ltd. 

33 Guangzhou Yuexiu 

Holdings Limited 

34 Anshan Iron & Steel 


35 State Grid Corporation of 

China 

Non-ferrous metal, 

engineering 


company 


SOE 

Military supplies Centrally controlled 

SOE 

Steel, resource, finance, 

manufacture, service 

Steel 

PROOF 


SOE 

Investment Limited liability 

company 


company 

Iron, steel Centrally controlled 

SOE 

Power grid Centrally controlled 

SOE

36 Shanghai Automotive 

Industry Corporation 


Auto manufacture Limited liability 

company 

37 Shougang Corporation Steel, resource, service Limited liability 

company 

38 Sinohydro Co., Ltd. Water conservancy, 

investment, engineering, 

service, trade 

39 Nam Kwong (Group) 

Company Limited 

40 Shenzhen Investment 

Holdings Co., Ltd. 

41 Shenhua Group 

Corporation 

42 China Poly Group 

Corporation 

Consumer goods, real 

estate, hotel, logistics 


SOE 


SOE 


company 

Resource Centrally controlled 

SOE 

International trade, real 

estate, culture, resource 


SOE 

43 TCL Group Company Electronic products Limited liability 

company 

44 Aviation Industry 

Corporation of China 

Aerospace manufacture, 

military 


SOE 

45 Jinchuan Group Limited Resource Locally controlled 

SOE 

46 Xinjiang Zhongxin 

Resource Co., Ltd. 

47 Guangdong National 

Shipping Corporation 

48 Wuhan Iron & Steel 


Resource Locally controlled 

SOE 

Transportation, logistics, 

real estate, recreation 

49 ZTE Corporation Telecommunication 

service 

50 China Guangdong 

Nuclear Power Holding 

Co., Ltd. 

Locally controlled 

SOE 

Metallurgy, engineering Centrally controlled 

SOE 


company 

Nuclear resource Centrally controlled 

SOE 

Sources: 2009 Statistical Bulletin of China’s OFDI (MOC, 2010); www.sasac.gov.cn. 

PROOF 

The state helps to create two important informal institutions that generate 

ideological influence on Chinese OFDI: state ideology and national pride. 

State ideology is a set of ideas that constitutes state goals, expectations, 

and actions, and it can be thought of as a comprehensive vision of the 

state held by all members of society. According to Smith and Kim (2006), 

national pride is ‘the positive effect that the public feels towards their country, 

resulting from their national identity (P127)’. These two factors are 

to some extent interrelated. A strong state ideology may increase national


PROOF 

pride, and national pride can also enhance state ideology. While the economic 

organization is intertwined with the ideological state, major Chinese 

multinationals usually incorporate national missions and national pride in 

conducting overseas strategies. Such ideology and pride may stem from the 

collective expectation of ‘carrying a great torch and striving to better develop 

the country’. Sometimes, a particular strategy at the firm level (such as a 

cross-border acquisition) is economically irrational (Hope et al., 2010). This 

could stem from an individual enterprise leaders’ greater ambition to pursue 

a successful ‘country image’ to foreign counterparts and infiltrate the 

‘Chinese brand’ into a global market. 

We argue that state ideology and national pride are two soft power institutions 

that may function as growth engines for Chinese firms to compete 

with international players. The effect of state ideology and national pride are 

more likely to be cultivated in the Chinese context because the Chinese culture 

is strong in collectivism and nationalism in comparison with the West. 

Such national culture allows the state to communicate ideology and pride 

through tangible and intangible social and cultural platforms as well as to 

create incentives and enforcement mechanisms. To fulfill its country-level 

strategies and thus have greater influence on the international investments 

of Chinese firms, the government stresses such state ideologies throughout 

its policy and administration process, as well as directly implements them 

in its wholly controlled SOEs. Hence, the formal OFDI institutional regimes 

further ensure the efficiency of the informal institutional-enforced effects on 

OFDI in China. 

2.4. Institutional and Chinese MNE-based OFDI 

We argue that the state plays important roles in shaping Chinese OFDI 

institutional regimes, including the formal and informal institutions. It is 

important to explore more thoroughly what theoretical implications we can 

draw from this phenomenon. Dunning and Lundan (2008) suggest that 

institutions influence multinational ownership, internalization, and location 

advantages, and thus determine the internationalization strategy of a 

company. Integrating institutions into the OLI paradigm offers a profound 

tool to understand how institutions help the formation of emerging multinational 

firms. Sun and colleagues (2010) propose a comparative ownership 

advantage framework to explain why EMEs such as those from China and 

India can internationalize and conduct specific cross-border M&As. The theory 

suggests that EMEs in developing countries can leverage country-specific 

advantages and combine them with firm-specific advantages to form comparative 

ownership advantages to drive their internationalization. 

Combining the ideas of Dunning and colleagues (Dunning, 2001; 

Dunning & Lundan, 2008) with those of Sun and colleagues (Sun et al., 

2010), we argue that not only the factor endowment structure but also the

PROOF 


institutional structure help EMEs generate comparative ownership advantages. 

Hence, we can broaden the country-specific advantages concept to 

include an institutional dimension, suggesting that institutions could be 

leveraged by EMEs to combine with company advantages to form specific 

ownership advantages. These institutional factors could be the formal and 

informal ones shaped under the role of state. For example, formal institutions 

(such as favorable credit and financing policies and the establishment 

of resource and information platforms overseas) can be combined with company 

production and entrepreneurial capabilities to exploit international 

market opportunities. From the informal institutional perspective, managing 

the state ideology and national pride institutional elements in the 

strategic management processes of companies can help them better co-opt 

the formal institutional regimes, thus maximizing globalization benefits. 

In essence, through a successful integration of the national level institutional 

advantages and the company level advantage, EMEs can build 

‘institution-based comparative ownership advantages’. With this institutionbased 

comparative ownership advantage, EMEs can cultivate business opportunities 

in specific host country markets and conduct institution-based 

OFDI. 

Proposition 1: The formal and informal institutions developed under the role 

of the state are sources of comparative ownership advantage for Chinese firms, to 

‘pull’ Chinese firms to conduct institution-based OFDI. 

2.5. The strategic choices of OFDI by Chinese multinationals 

While institutions are helpful for developing firm-specific ownership advantage, 

corporate executives may view the institutional framework as a favorable 

pull factor for internationalization (Lewin, Long, & Carroll, 1999). 

On the one hand, they increase EME confidence in internationalization. 

On the other hand, they can be exploited to change the cost and benefit 

structure in a multinational’s potential OFDI activity in a host country 

market. We will discuss Chinese multinational strategic choices in 

OFDI below. 

Choice of OFDI mode 

In contrast to mature market multinationals, EMEs have fewer incentives 

for efficiency-seeking and cost-minimizing outward investments, as the EME 

itself has ample supplies of low-cost, productive labor and inexpensive land. 

Rather, Chinese firms have higher incentives for asset-seeking and marketseeking 

OFDI. In comparison to independent OFDI and contractual joint 

ventures, M&A strategy can help Chinese firms to more quickly access 

strategic assets and potential markets, and thus upgrade their global competence 

more efficiently. However, in these aggressive cross-border M&As, 

the pressures of managing strategic and operating risks are much higher


PROOF 

than when seeking only cost efficiency (Kumar, 2009). We believe the formal 

and informal institutions mentioned above will help overcome the risks 

and facilitate adopting the M&A mode. 

Formal institutional support will help the resource and domestic market 

demand of potential multinationals and thus facilitate more entrepreneurial 

and aggressive international exploration. Formal institutional support also 

allows firms to focus on managing the strategic and operating risks in 

M&As with greater efficiency. The informal institutions can help intrinsically 

reinforce political or strategic objectives of the involving parties. These 

arguments suggest that formal and informal institutional supports can help 

Chinese multinationals adopt more aggressive OFDIs such as M&As. 

Proposition 2: In relation to independent OFDI and greenfield joint ventures, 

Chinese multinationals are more likely to adopt acquisition in their internationalization. 

Choice of OFDI location 

Multinationals invest in the most advantageous locations to fulfill the firm’s 

efficiency, asset- and market-seeking strategic objectives (Dunning, 1980, 

1988). In Chinese OFDI, the endogenous formal and informal institutions, 

shaped by the role of the state, help determine location choice. Regarding 

formal institutions, the government encourages firms to target resource 

and strategic asset-intensive regions through various preferential policy supports 

such as credit and tax incentives, as well as other administrative 

methods. For example, Chinese SOEs enter countries such as Africa and 

South America more extensively because they are resource-intensive countries 

where the Chinese state can acquire strategic raw materials to enhance 

the country-level resource endowments. Examples include Capital Iron & 

Steel’s acquisition of Hierro Peru Mining and Baosteel’s investment in a steel 

plant in Brazil. Informal institutions also influence which countries Chinese 

firms enter, including those helpful for maintaining Chinese national pride. 

The Chinese prefer to invest in regions where national pride and state ideology 

can be better maintained and leveraged. For example, regions such as 

Japan, South Korea, Taiwan, Singapore, Hong Kong (the so-called ‘four dragons’), 

as well as Malaysia, one of the new ‘four tigers’, give better location 

advantages (Sun et al., 2010). These institutional enforcements will help set 

the boundaries of locations for Chinese OFDI. 

Proposition 3: Chinese multinational firms tend to invest in countries or regions 

where both formal and informal institutions developed under the role of the state 

are more likely to play a role. 

Choice of OFDI industry 

We believe formal institutions play a major role in guiding OFDI industry 

choice. As the Chinese government views OFDI as an important means


of integrating global resources and value chain markets, its aim is carried 

out mainly through securing stable sources of raw materials and obtaining 

technological assets scarce in China. The government has specifically 

encouraged OFDI in the resource exploration and extraction industries (Cai, 

1999) as well as the manufacturing (processing and assembling) industries 

where Chinese companies have a competitive edge. But these Chinese 

industries are weak in designing, researching and developing (R&D) and, 

through preferential policies and direct administrative control, the government 

is encouraging OFDI. The government has recently favored more 

investments in the financial sector overseas. China Investment Corporation 

(CIC) invested in Blackstone and Morgan Stanley to use the global 

financial crisis to leverage China’s huge foreign currency reserves. However, 

we do not regard these overseas investments as traditional MNE behavior 

explained by theory. Informal institutions support formal institutions in 

deciding which sectors should be involved in OFDI. Some target OFDI industries 

may involve greater elements of national pride and state ideology to 

help generate greater political benefits. Because of the ideology concern, it 

may be hard for Chinese multinationals to conduct OFDI in industries that 

generate ideology conflicts such as the media sector. Figure 1.4 synthesizes 

the above propositions in this chapter. 

Proposition 4a: Chinese multinational firms tend to invest in overseas manufacturing 

(design and R&D) industries that can help upgrade their domestic industrial 

structure and global value chains. 

Proposition 4b: Chinese multinational firms tend to invest in overseas resource 

exploration and extraction industries that can help China pursue and secure scarce 

natural resources. 

Hard power (economic) 

Formal institutional 

determinants 

State policy 

Administrative 

system 

Government 

ownership 

The state Soft power (political) 

Chinese multinationals’ 

comparative ownership 

advantages 

Chinese multinationals’ 

OFDI: 

motivation 

strategy 

PROOF 

Informal institutional 

determinants 

State ideology 

National pride 

Figure 1.4 The role of state and Chinese multinationals’ institution-based OFDI


3. Discussion and conclusion 

PROOF 

As China emerges as an important player in the world economy, the 

role of the state is crucial through the promotion of OFDI by Chinese 

multinationals. The Chinese state executed its role through constructing 

formal and informal institutions to influence OFDI trajectories. Under such 

circumstances, we observe an extensive interplay between the macro-level 

state policy and institutional frameworks and the micro-level firm and OFDI 

strategic choices. In both cases, formal and informal institutional factors 

drive Chinese firms to conduct OFDI in different investment modes, location 

choices, and types of industries. 

Due to space limitation, there are some important issues our chapter did 

not capture in detail although they deserve attention. Institutions do not 

matter to all firms, and they do not matter in similar ways (North, 1990; 

Scott, 1995). This suggests that the institutions derived from the role of the 

state may generate contingent effects on OFDI by Chinese firms. The first 

contingent factor is related to a stratified structure that the state constructs 

in developing the formal and informal institutional OFDI regime. In such 

a structure, the institutional regime is exclusive in nature where the state 

renders the advantageous institutions only to certain groups of firms: not all 

Chinese multinationals enjoy the benefits in their internationalization. The 

state makes such exclusions using criteria such as how important the firm is 

to the whole economy. Only influential firms such as large firms or firms in 

more important industries benefit from the supportive regime. 

The second contingency factor is related to a ‘double-edged sword’ or ‘dark 

side’ of the institutional influence. In contrast to the ‘benefits’ generated 

by institutional regimes for ‘some’ firms, there may be ‘costs’ or ‘liabilities’ 

assigned by similar institutions to other firms. While we discuss the pull role 

of the state and institutional regimes on Chinese OFDI, we cannot ignore the 

push role of the same institutional regime to some OFDI activities (e.g., Luo 

& Tung, 2007; Witt & Lewin, 2007). The ‘supporting’ institutional regime 

may create costs and disadvantages to some firms’ domestic market competition, 

and thus crowd them out to the international markets to pursue 

growth. This is reflected by the large number of Chinese overseas investments 

in Latin America, many of them in three tax havens (Witt & Lewin, 

2007). 

The third contingency factor is related to the ‘mixed’ objectives that the 

state sets for OFDI (Luo and Tung, 2007; Luo et al., 2010). Except for the 

economic driving forces (mostly efficiency and effectiveness from the firm’s 

perspective), Chinese firms are also pulled to conduct political OFDI that 

mostly satisfies country-level objectives. Key Chinese multinationals are 

forced to exert ‘helping hand’ behaviors to fulfill the country-level political 

goals such as strengthening inter-governmental political ties (Luo and Tung, 

2007). This was particularly evident in China’s investment in some Third


World countries (Luo and Tung, 2007). The state is more likely to mandate 

SOEs to conduct such OFDI activities because the state has a direct control 

of the SOE sector. Such political mandates may also be possible with private 

firms, especially when the private parties’ interests are intertwined with 

the state’s interests. However, compared with SOEs, private sector firms are 

more likely to act independently in OFDI and be driven by economics, even 

when such OFDIs result from exploiting the state’s supportive institutional 

regime. 

The last contingency is that to leverage better the advantageous OFDI 

institutional regime, firms must have specific internal conditions. The most 

important internal conditions are capabilities that can facilitate successful 

integration of company resources and OFDI objectives with the countryspecific 

institutional supports. Such capabilities include strong adaptation 

capabilities in relation to the external institutional environments (Elango & 

Pattnaik, 2007; Yiu et al., 2007); cross-border learning and absorptive capacity 

(Johanson & Vahlne, 1997; Teece et al., 1997); and creativity and innovation 

in company integration of global value chains (Sun et al., 2010). Other 

factors can be managerial intentionality (Hutzschenreuter, Pedersen, & 

Volberda, 2007; Kumar, 2009) and international entrepreneurship (Yiu et al., 

2007). Given the supporting institutional environments, these factors are 

important for generating effective strategic choices and adjustments in 

exploiting international market opportunities. The capability factor is more 

important than resources (Deng, 2007; Sun et al., 2010) because firms with 

unique capabilities can obtain essential resources that they lack, either 

through exploiting the home country institutional environments or through 

integrating the global resource platform. 

These four contingency views suggest future research directions on 

Chinese firms’ internationalization, to derive better predictions on the path 

and trajectory of Chinese OFDI: these need to include other theoretical 

approaches such as political economy perspectives; views on resource and 

capability; evolutionary theory; and the institutional perspective. 

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Author Index 

Acharya, R., 270 

Ackerly, A., 345 

Ahlstrom, D., 24 

Aizenman, J., 58 

Ajakaiye, O., 308, 311, 313, 314 

Akoorie, M., 39 

Alden, C., 293 

Alessandri, T., 122 

Aliber, R. Z., 13, 44 

Allard, G., 6–7 

Almeida, J. G., 39 

Almeida, P., 39, 178 

Alon, I., 1, 2, 8, 39, 109, 137, 142, 151, 

212, 236, 258, 280, 376, 379, 380, 

391, 393 

Altbach, E. G., 81, 85, 86, 87, 94 

Amelio, William, 145 

Amit, R., 138 

Andreosso-O’Callaghan, B., 178 

Antkiewicz, A., 191 

Ash, R., 178, 179 

Asiedu, E., 289 

Astrachan, J. H., 215 

Atkins, R., 212 

Au, L. W., 329 

Autio, E., 39 

Baisden, D. R., 344 

Bakkalapulo, A., 344 

Balfour, F., 234, 236, 244 

Ball, M., 337 

Bandelj, N., 165 

Bankston, J., 344 

Barbosa, F., 387 

Barkema, H., 142 

Barnett, C., 342, 343, 345, 347 

Barney, J. B., 39, 177, 213 

Barrell, R., 57, 58 

Bartlett, C. A., 39 

Beamish, P., 74, 124 

Beausang, F., 177, 178 

Becattini, G., 240, 245 

Benelli, G., 355 

Benelli, T., 354 

396 

PROOF 

Bengston, M., 245 

Bergsten, C., 57 

Besada, H., 304 

Bethel, J., 126 

Beuttenmuller, P., 8 

Bhattacharjee, S., 260, 261 

Bieri, J., 56 

Billington, N., 56 

Bird, Ningbo, 49 

Birkinshaw, J., 214 

Björkman, I., 214 

Blangiardo, G., 243 

Blank, D. M., 347 

Blonigen, B. A., 56, 58 

Bloodgood, J. M., 39 

Boie, B., 86, 235, 236, 239, 

267, 377 

Boisot, M. H., 14, 40, 258 

Bolling, C., 57 

Bonaglia, F., 179 

Bond, M. H., 243, 247 

Booth, W., 345 

Bordonaro, F., 259 

Bouw, B., 257 

Bowen, P., 123 

Brandes, P., 122 

Brandt, P. T., 58 

Brautignam, D., 310 

Broadman, H. G., 306, 311, 313 

Brod, M., 4, 392 

Bromiley, P., 124 

Browning, M., 337, 344 

Brush, T., 124 

Bruton, G. D., 13, 24 

Buck, T., 55, 123, 126, 132, 179, 238 

Buckley, P. J., 12–15, 13, 14, 15, 

39–45, 40, 41, 42, 43, 44, 45, 

55, 57, 97–8, 108, 109, 123, 158, 

164, 177, 179, 191, 212, 238, 239, 

377, 391, 394 

Burgers, W., 123 

Burghart, N., 179 

Burke, C., 311, 313, 314 

Byrd, A., 341–42, 346

Cai, K. G., 31, 55, 236 

Calderon-Rossell, J. R., 56 

Cantwell, J., 43, 57, 74, 108, 177, 178 

Capron, L., 141, 143, 217 

Carney, M., 219 

Carpenter, M., 122, 124, 125, 130 

Carroll, T. N., 29 

Cartwright, S., 213 

Casson, M., 13, 108, 177 

Caves, R. E., 13, 39, 56, 177 

Ceccagno, A., 237, 241, 243, 244, 

246, 248 

Chaisse, J., 81 

Chakrabarti, A., 57 

Chan, S., 97, 98, 238 

Chang, H.-J., 14 

Chang, S. J., 55, 57 

Chang, T., 39 

Chauduri, S., 139 

Chen, C., 238, 239 

Chen, E., 108 

Chen, F., 330 

Chen, G., 330, 337, 348 

Chen, H., 158 

Chen, J., 330 

Chen, Q., 6 

Chen, T.-J., 158 

Chen, X. H., 273 

Chen, Y., 120 

Cheng, L. K., 49, 204 

Chetty, S. K., 39 

Cheung, Y., 38 

Child, J., 14, 39, 40, 41, 49, 109, 137, 

138, 141, 145, 157, 178, 179, 239, 

259 

Chiou Wei, S. Z., 57 

Choi, J. J., 57 

Chowdhury, A. R., 56 

Chuanzhi, Liu, 144 

Churchward, C., 344 

Churchward, J., 346 

Claessens, S., 13 

Clark, L., 345 

Clegg, L. J., 12, 45, 55, 57, 109, 123, 179 

Cogman, D., 213, 214 

Cognato, M. H., 81, 85, 86, 87, 94 

Cohen, M. W., 137, 138, 140, 215 

Collier, P., 292 

Connelly, B., 124, 125 

Constantine, G., 343 

PROOF 

Cooke, F. L., 217 

Cool, K., 13 

Corkin, L., 301, 311, 313, 314 

Cotner, M. G., 347 

Covin, J., 138 

Cristaldi, F., 243, 245 

Cross, A. R., 12, 55 

Cuervo-Cazurra, A., 280, 291 

Cui, L., 40, 42, 109, 212 

Culem, C. G., 56 

Curran, L., 189 


daCosta, R., 124 

Daily, M., 138 

Dalekowschodnia, S., 167 

Dalton,D.R.,138 

Daoyu, L., 337 

Datta, D., 122, 124, 126 

Davies, K., 258 

Davies, R. B., 263 

De Propris, L., 179 

DeFusco, R., 126 

Dei Ottati, G., 241, 245 

Delios, A., 128 

Deng, P., 4, 11, 14, 33, 39, 40, 41, 49, 55, 

97, 137, 142, 143, 145, 149, 178, 

179, 212, 219, 238, 239, 329, 330, 

349, 392 

Denicolai, S., 39 

Denison, T., 241, 243 

Devies, K., 234 

Dharwadkar, R., 122 

Diamond, R., 348 

Diaz, G., 339 

Diebold, F., 73 

Dierickx, I., 13 

Dillon, P., 340 

Ding, D. Z., 13, 235 

Ding, W., 3, 392 

Djankov, S., 13 

Dobler, G., 301, 311 

Donadio, R., 251 

Dongsheng, L., 148 

Doolittle, L., 339, 340 

Dore, R. P., 12 

Drahokoupil, J., 165, 167 

Driffield, N., 179 

Du, J., 120 

Dunlop, J., 337

398 Author Index 

Dunning, J. H., 2, 11, 12, 13, 14, 28, 30, 

38, 39, 42, 43, 48, 54, 57, 108, 109, 

123, 158, 163, 164, 177, 178, 189, 

314, 315, 376 

Dyer, G., 212 

Dykes, B., 124 

Easterly, W., 292 

Edwards, C., 179 

Edwards, S., 56 

Egger, H., 263 

Egger, P., 263 

Egri, C., 24 

Eisenhardt, K. M., 110, 142, 220, 222 

Eisner, M., 340 

Elango, B., 13, 33 

Enderwick, P., 39 

Evangelista, F. U., 39 

Falkner, D., 138 

Fama, E., 124 

Farmer, G., 332 

Farooki, M., 312, 321–22 

Farrell, D., 217 

Farrell, R., 58 

Fetcherin, M., 1 

Fetscherin, M., 1, 8, 151, 376, 377, 379, 

394 

Fields, K. J., 282 

Filatotchev, I., 13, 122, 124 

Filippov, S., 161, 168, 179 

Finkelstein, S., 214, 215 

Fioretti, G., 240, 241 

Fladrich, A. M., 6, 237, 244, 245, 249 

Flores, I., 331, 333, 335, 345 

Foss, N. J., 137 

Foster, V., 313 

Fotak, V., 269, 273 

Foushee, B., 346 

Franklyn, P., 261 

Freeman, D., 312 

Froot, K. A., 56 

Fuchs, H. J., 235, 236, 237, 239 

Fung,H-G.,55 

García-Canal, E., 280 

Garnaut, R., 249 

Gaston, N., 58 

Gavin, M., 338 

Ge, G. L., 13, 235 

PROOF 

Gedajlovic, E., 219 

Gelb, S., 304, 305 

Genc, M., 280, 291 

George, G., 137, 138, 213, 215, 219, 330, 

333, 337, 348 

Georgopoulos, G. J., 56, 57 

Geringer, J., 124 

Ghauri, P. N., 39 

Ghosh, I., 58 

Ghoshal, S., 39 

Gilboy,G.J.,178 

Globerman, S., 189 

Glossop, P., 261 

Goldstein, A., 179 

Gomes-Casseres, B., 14 

Gomez-Mejia, L., 124 

Gopinath, M., 57 

Goranova, M., 122 

Graham, E. M., 165 

Grant, A. J., 217 

Gray, H. P., 54 

Griffin, L., 344 

Griffith, D. A., 13 

Grollmann, P., 217 

Grubaugh, S. J., 43, 45, 57 

Grubb, P. D., 39 

Grunwald, R., 225 

Gu, J., 234, 236, 282, 301, 302, 310 

Guang, Y., 338, 339, 347 

Gugler, P., 1, 81, 86, 151, 235, 236, 239, 

267, 377 

Guillén, M., 217, 280 

Guisinger, S., 13 

Guo, B., 120 

Guo, J. Q., 56 

Haig, A., 336 

Haleblian, J., 214, 215, 218 

Hall, P. A., 69, 218 

Hambrick, D., 126 

Hamilton, J. D., 63 

Hamilton, R. T., 39 

Han, B., 12, 158, 191, 259 

Harney, A., 234 

Harrison, B., 240 

Harrison, J. S., 141 

Harzing, A. W. K., 158 

Hattingh, D., 387 

Hawawini, G. V., 54 

Hay, F., 179, 180

Hayward, M. L. A., 141 

He, F., 82, 83, 85, 87 

He, L., 20 

Heath, P., 14 

Heckman, J. J., 216 

Hendrickx, M., 124 

Henley, J., 309 

Hennart, J. F., 12, 13, 14 

Herrmann, P., 122, 124, 126 

Hesterly, W., 177 

Hilsum, L., 317 

Hitt, M. A., 39, 74, 122–7, 141, 150, 214, 

215 

Ho, P. C., 61, 62 

Hodges, H., 344 

Hodgson, G., 260 

Holslag, J., 312 

Hong, E., 39, 55, 74, 97, 188, 238 

Hong, S., 56 

Hongbin, J., 55 

Hood, G., 336 

Hope, O.-K., 12, 28 

Horst, F., 57 

Hoskisson, R., 122–4, 126, 127 

Hua, J., 218 

Huang, C.-H., 55, 179 

Huang, Y., 14 

Hughes, S., 250 

Hummer, 107 

Hunt, A., 347 

Hutzschenreuter, T., 33 

Hwang, P., 123 

Hymer, S. H., 13, 108, 177 

Inkpen, A. C., 188 

Ireland, R. D., 39, 122, 123, 126, 141 

Ivarsson, I., 178 

Iversen, C., 13 

Jackson, J. W., 347 

Jackson, S., 74 

Jacobson, S., 330, 346 

Jansen, J. P., 139, 141 

Jensen, M., 124, 126, 213 

Jeon, B. N., 56, 57 

Jiang, F., 40, 42, 109, 212 

Jiang, Y., 24, 179 

Jiang, Z., 15 

Jiannian, Y., 339, 340 

Jindra, B., 122, 124 

PROOF 

Jiwei, L., 87 

Johanson, J., 12, 33, 108, 177 

Johnson, J. P., 239 

Johnson, R., 126, 127 

Jonsson, T., 178 

Jopsom, B., 316 

Joseph, S., 339 


Kagame, P., 281 

Kale, D., 301, 311 

Kang, R., 179 

Kang, Y., 217 

Kao, E. H. C., 55 

Kaplan, R. D., 282, 284 

Kaplinsky, R., 7, 281–3, 285, 305, 311, 

393 

Kato, T., 132 

Ke, Y., 179 

Keister, L. A., 14 

Keller, M., 2, 81, 84, 392 

Keller von, E., 179 

Kenney, B., 332 

Kern, S., 82, 84 

Khan, G., 344 

Khana, T., 258 

Khosravian, C., 245 

Kieser, A., 225 

Kim, H., 124, 127 

Kim, L., 139, 140 

Kim, S., 27, 56 

Kim, W., 123 

Kim, Y. K., 54 

Kincaid, R., 347 

Kindleberger, C. P., 177 

King, D. R., 213 

King, R., 138, 141 

Klein, M. W., 56 

Kloss, M., 387 

Knickerbocker, F. T., 13 

Knoerich, J., 5, 179, 186, 188, 392 

Koch, U., 225 

Kogut, B., 13, 57, 138, 141 

Kohlhagen, S. W., 44 

Komasa, B., 167 

Komesaroff, M., 318 

Konka, 148 

Koop, G., 59 

Kravis, I. B., 56 

Krueger, J., 338 

Krugman, P., 240


Kshetri, N., 217 

Kuemmerle, W., 178 

Kumar, K., 54 

Kumar, N., 30, 33 

Kurihara, J., 235, 239 

Kwan, C., 260 

Kyrkilis, D., 42, 44, 45, 48, 57 

Lall, S., 57, 108, 177, 315 

Lancee, B., 248, 250 

Lane, P. J., 138, 140, 141, 216 

Lang, L., 13 

Langley, F., 333, 334 

Lardy, N. R., 234 

Larsson, R., 214, 215 

Lattemann, C., 216 

Lau, C.-M., 13 

Lau, M., 133 

Lecraw, D. J., 177, 178, 315 

Lee, C. K., 264 

Lee, J., 343 

Lee. T. D., 336 

Lei, D., 140 

Leonidou, L. C., 39 

Leung, M. W. H., 243 

Levinson, H., 215 

Levinthal, D. A., 137, 138, 140, 215 

Levitt, B., 215 

Lewin, A. Y., 12, 13, 29, 32 

Li, J. T., 218 

Li, K., 55 

Li, M., 218 

Li,P.P.,55 

Li, W., 24 

Liang, H., 391 

Lichtenthaler, U., 216 

Lien, Y.-C., 13 

Lin, J. D., 12 

Lin, X., 6, 273 

Lin, Z. J., 218, 219 

Lindenbaum, B., 178 

Lippman, S. A., 13 

Lipsey, R. E., 56 

Liqiang, N., 2, 391 

Liu, C., 329 

Liu, L., 179 

Liu, M., 179, 218 

Liu, Q. W., 55, 217 

Liu, X., 4, 43, 55, 122, 238 

Liu, Y., 5, 217 

PROOF 

Long, C. P., 29, 132 

Loree, D., 13 

Love,J.H.,179 

Lovelock, P., 264 

Low, S. P., 55 

Lu, J. W., 4, 13, 122, 124 

Lu, Z., 217 

Lubatkin, M., 213 

Lundan, S. M., 11, 13, 28, 177, 376 

Luo, Y., 12, 13, 14, 15, 24, 32, 33, 39, 

126, 158, 159, 191, 212, 216, 238, 

239, 259 

Luski, I., 263 

Lyles, M. A., 137, 140 

Lyons, G., 89, 99 

Ma, C., 329 

Ma, X., 13 

Ma, Z., 49 

Madhok, A., 39 

Maduell, Michael, 100 

Magagnini, S., 329, 331 

Makino, S., 13, 40 

March, J. G., 18, 101, 215 

Mariano, W., 345, 346 

Markusen, A., 240 

Marshall, A., 239, 240 

Martin, M. F., 87, 259 

Martin, R., 240 

Masron, T. A., 157, 158, 163 

Mathews, J. A., 40, 109, 126, 164, 179, 

280, 315 

Mathieu, J., 74 

McCollum, B., 336 

McCoy, A., 343 

McDermott, M., 55 

McIntyre, J., 39 

McIntyre, J. R., 109, 137, 142, 212, 236, 

280, 376 

McManus, J., 13 

Megginson, W., 269, 273 

Meikie, S., 344 

Mervine, B., 341 

Messner, D., 322 

Meyer, K., 12, 109–10 

Meyer, M. W., 14, 40, 258 

Miao, Y. C., 259 

Mica, J., 336 

Miesing, P., 218 

Milelli, C., 179, 180

Miller, J., 124 

Miller, K., 343 

Miller, T., 124, 125 

Ming, D., 337 

Miracky, W., 82, 84, 86 

Mitchell, W., 124, 141, 143 

Mizruchi, M., 126 

Mody, A., 56 

Moon, H.-C., 178 

Moran, T., 57 

Morck, R., 55, 143 

Morgan, B., 339 

Morgan, P., 341, 345 

Morgenstern, O., 263 

Morris, M., 7 

Moyo, D., 292, 293 

Muekalia, D., 282 

Mueller, M., 264 

Murphy, K., 126 

Murphy, M., 331 

Musselle, K., 344 

Musteen, M., 122, 124, 126 

Nachum, L., 54, 158 

Nadeau, B., 243 

Nadolska, A., 142 

Narula, R., 108, 315 

Nee, V., 14 

Nelson, C., 125 

Nelson, R. R., 215 

Newman, R., 143 

Ng, S. H., 39, 55 

Nguyen, H., 12 

Ni, L., 2, 391 

Nicolas, F., 164, 171, 179, 236, 237 

Nixon, R., 336 

Nolan, P., 178, 302 

Norbu, T. J., 346 

North, D. C., 32 

Noy, I., 58 

Oxelheim, L., 122 

Pablo, A. L., 213 

Pain, N., 57, 58 

Palamara, G., 39 

Palmer, T., 126 

Pantelidis, P., 42, 44, 45, 48, 57 

Pantulu, J., 58 

Pappu, R., 380 


Paris, R., 260 

Park, Y. P., 14 

Pattnaik, C., 13, 33 

Pavitt, K., 177 

Peace, J. L., 14 

Pearce, R. D., 43 

Pedersen, T., 33 

Peng, L., 337 

Peng, M. W., 11, 13, 14, 24, 41, 133, 158, 

216, 218 

Pennings, M., 126 

Perkins, T., 257 

Pick, D., 57 

Piesse, J., 13 

Pietrobelli, C., 235, 236, 238, 239, 242, 

243, 244, 245 

Pin, Ni, 114 

Ping, D., 109 

Ping, Z., 55 

Pino, M., 347, 348 

Pisano, G., 13 

Pisano, V., 140 

Piscitello, L., 245 

Pistor, K., 24 

Pistoresi, B., 56 

Pitelis, C., 14 

Pitkethly, R., 138 

Polzcer, S., 257 

Poncet, S., 97–8 

Poon,J.P.H.,58 

Porter, M., 54 

Portes, A., 240, 245 

Power, M., 281, 293, 311 

Prugel, T. A., 43, 45 

Pruthi, S., 109 

Pugel, T. A., 57 

Puranam, P., 139, 141 

Pyke, F., 240 

Qian, W., 55, 178 

Qian, X., 38 

Qichen, Q., 337 

Qimou, M., 340 

Qiusheng, H., 148 

Rajgopal, S., 126 

Ralston, D. A., 24 

Raskin, A., 178 

Rauner, F., 217 

PROOF


Rebellotti, R., 235, 236, 238, 239, 242, 

243, 244, 245 

Redding, G., 74 

Reed, J., 229 

Ren, B., 1, 11, 391 

Rhee, S. S., 56 

Roberts, D., 234, 236, 244 

Rodrigues, S. B., 14, 39, 40, 41, 49, 

109, 137, 157, 178, 179, 

239, 259 

Roe, T., 57 

Roehl, T. W., 178 

Rohter, L., 345 

Rolle,J.D.,54 

Rosenboim, M., 263 

Rosengren, E., 56 

Rossi, V., 179 

Rozanov, A., 86 

Ruback, R. S., 213 

Rugman, A. M., 13, 55 

Rui, H., 12, 39, 41, 55 

Rumelt, R. P., 13 

Rupert, C., 337 

Russell, C. J., 13 

Sader, F., 56 

Saebi, T., 168, 179 

Saggi, K., 180 

Salk, J., 140 

Sanders, W., 122, 124–6, 130 

Sanfilippo, M., 235, 236, 238, 239, 

242–5 

Sapienza, H. J., 39 

Sardy, M., 379–80 

Sargent, R., 340–1 

Sauvant, K. P., 234, 257, 260 

Schmitz, A., 56 

Schnedler, J., 335 

Schneider, A., 149 

Schneider, M., 345, 347 

Schoemaker, P. J. H., 138 

Schoenberg, R., 213 

Schüler-Zhou, Y., 4 

Schüller, M., 4 

Schweiger, D. M., 213, 214 

Scott, W. R., 32 

Seligman, S. D., 250 

Sengenberg, W., 240 

Seyoum, B., 13 

Sforzi, F., 240, 242 

PROOF 

Sgobbi, F., 245 

Shahbudin, A. S., 157, 158, 163 

Shan, W., 178 

Shane, M., 57 

Shangkun, Y., 336 

Shapiro, D., 189 

Shattuck, H., 337 

Shaver, M., 124 

Shenot, C., 338, 339, 341 

Shevlin, T., 126 

Shi, L., 179 

Shi, Y., 392 

Shimizu, K., 140, 214 

Shou, Y., 120 

Shrivastava, P., 214 

Shu, C., 238 

Shuen, A., 13 

Shufu, Li, 116 

Sigurdson, J., 178 

Simmons, M. S., 239 

Simon, H., 212 

Sims,C.A.,58 

Singh, H., 140 

Smith, T. W., 27 

Smolenski, N., 357 

Snyder, J., 348 

Södermana, S., 41 

Song, J., 178 

Sorge, A. M., 158 

Soskice, D., 218 

Spigarelli, F., 8 

Spitz, J. J., 340, 341 

Stahl, G. K., 138, 141, 214 

Stearns, L., 126 

Stein, J. C., 56 

Stephan, J., 122, 124 

Stevens, G. V. G., 44 

Stoltenberg, C., 236 

Strange, R., 13 

Stratton, J., 346 

Strother, S. G., 331, 332, 336 

Sturm, J-E., 58 

Subacchi, P., 84 

Subramanian, V., 54 

Sun, L. X., 39, 55, 74, 97, 188, 238 

Sun, S. L., 11, 14, 28, 30, 33 

Sunley, P., 240 

Sutherland, D., 14 

Swedenborg, B., 57 

Szulanski, G., 140

Tan, H., 12, 134, 179 

Tan, J., 213, 214, 218 

Tang, F.-C., 235, 236, 239 

Taylor, R., 39 

Teece, D. J., 13, 33 

Terheggen, A., 322 

Terpstra, R. H., 24 

Thomas, D., 244 

Thomas, M., 339, 341, 344 

Thomas W. B., 12 

Tian, Y., 39 

Tianle, Y., 55 

Tihanyi, L., 13 

Tijaja, J., 321–2 

Timmerman, K., 345 

Tin, A., 332, 334, 335, 336, 337, 339 

Ting,C.C.,336 

Tolentino, P. E., 2, 392 

Toncar, M., 379, 380 

Tong, J. T., 24 

Trivedi, P. K., 56 

Truman, E. M., 100 

Tse, D. K., 178 

Tull, D. M., 316 

Tulman, J. P. 

Tung, R. L., 12, 13, 24, 32, 33, 126 

Turner, A., 189 

Uhlaner, R. T., 214 

Vaara, E., 141 

Vahlne, J.-E., 12, 33 

Vaidyanath, D., 140, 153 

van den Bosch, F. A. J., 139, 140 

Vandaele, J., 318 

Vanoli, L., 2, 392 

Vasavada, U., 57 

Vaughan, V., 331 

Vega-Redondo, F., 263 

Verdin, P., 54 

Vernon, R., 13 

Voigt, A., 138, 153, 214 

Volberda, H. W., 33 

von Neumann, J., 263 

Voss, H., 12, 40, 42, 55, 123, 158, 179, 

191, 236, 238 

Vyas, D., 12 

Wadhwa, V., 217 

Walter, G. A., 213 

Wan, W., 218 

Wang, C. M., 264 

Wang, D., 13 

Wang, K., 120 

Wang, M. Y., 39, 158 

Wang, W., 24 

Wang, Y., 41 

Wanling, D., 3, 109, 392 

Ward, S., 145 

Warner, M., 39, 55 

Wei,W.,8,391 

Weidenbaum, M., 250 

Wiedersheim-Paul, F., 108, 177 

Weil, S., 312 

Weiss, M. A., 99, 101 

Wells, L., 108, 177, 315 

Wenk, K., 188 

Wesson, T., 178 

West, A. S., 214 

Westhead, P., 39 

Whalley, J., 191 

Wheeler, D., 56 

Wheeler, M., 56 

Whitley, R. D., 218 

Whittington, L., 265, 273 

Wiersema, F., 123 

Wild, F., 318 

Williams, J. T., 58 

Williamson, O. E., 177 

Williamson, P. J., 178, 258, 316 

Winter, S. G., 215 

Wiseman, P. M., 126 

Wiseman, R., 124 

Witt, M. A., 12, 13, 32 

Wolf, B. M., 57 

Wong, J., 97, 98 

Wong, S. R., 126, 238 

Woywode, M., 5 

Woyzbun, E., 274 

Wright, C., 336 

Wright, M., 109 

Wu, B., 237 

Wu, D., 120 

Wu, F., 39, 55, 74, 178, 179 

Wu, H., 46, 238–9 

Wu, J., 128 

Wu, X., 3, 392 

Xian, W., 340 

Xiaobo, W., 3, 109 

Xiaoping, D., 15, 329 

PROOF 

Author Index 403


Xin, L., 14, 55, 179 

Xu, B., 122, 124 

Xu, C., 24 

Xu, X., 39, 55 

Xue, Q., 12 

Yan, D., 11 

Yang, C. N., 336 

Yang, D., 55 

Yang, H., 179 

Yang,J.Y.Y.,56 

Yang, S., 340–1 

Yang, X., 218 

Yao, S., 14 

Yao, Y., 350 

Yauch, A., 344 

Yeh, R.-S., 13 

Yeo, H. S., 55 

Yeung, B., 55 

Yeung, H. W., 55, 109, 124, 143 

Yin, E., 258 

Yin, R. K., 142, 222 

Yip, G. S., 12, 39, 41, 55 

Yiu, D., 13, 14, 33 

Yongjiang, S., 3 

Young, M., 24, 133 

Young, S., 55, 178 

Yu, J., 350 

Yuanxing, Z., 338 

Zaheer, S., 158 

Zahra, S. A., 39 

Zander, U., 13 

Zanin, V., 237 

Zemin, J., 15, 336 

Zeng, M., 178, 316 

ZEW, 212 

Zhan, J. X., 39, 178 

Zhang, H., 350 

Zhang, M., 82, 83, 85, 191 

Zhang, W., 7 

Zhang, Y., 161, 191 

Zhao, H., 41 

Zhao,X.D.,15 

Zheng, P., 12 

Zheng, S., 120 

Zheng, Y., 1, 391 

Zhimin, M., 335 

Zhoa, M., 55 

Zhou, N., 128 

Zhou, W., 179 

Zhu, Z., 57 

Zollo, M., 140 

Zorn, T., 126 

Zou, S., 39 

Zucchella, A., 39 

Zuyun, J., 360 

PROOF

Subject Index 

AAA, see American Automobile 

Association (AAA) 

absorptive capacity, 137–51, 215–20 

conceptual model of, 220 

cross-border mergers and acquisitions 

and, from China, 142–50 

Lenovo, acquisition of IBM Personal 

Computing business, 143–7 

TLC, failed acquisition of Thomson’s 

TV business, 147–50 

individual, 220 

multidimensional perspective of, 

219–20 

multilevel perspective on, 216–19 

individual levels, 216–17 

national levels, 218–19 

organizational levels, 217–18 

national, 220 

organizational, 220 

preferred research method for, 220–2 

data collection for, 221–2 

results of, 222–8 

theoretical model for, 138–42 

case study research method, 142 

strategic assets, 140–2 

Academy of Management Annual 

Meeting, 151 

acquisitions 

of Benelli, 356–8, 366–7 

cross-border, 30 

of IBM Personal Computing business, 

143–7 

of Thomson’s TV business, 147–50 

of Volvo, 384–5 

see also mergers and acquisitions 

(M&As) 

AD Week, 335 

Administration of Overseas Investment 

Projects, 15 

AEI, see American Eastern International 

(AEI) 

AERC, see African Economic Research 

Consortium (AERC) 

AES Wind Generation, 91 

405 

PROOF 

Africa 

future research on, 293 

limitations of, 293 

outward foreign direct investment in, 

Chinese, 6–7, 279–98 



theory and hypothesis on, 279–84 

dependent variables, 284–90 

results on, 290–1 

Africa Frontier Advisory, 305 

African Development Bank, 312 

African Economic Research Consortium 

(AERC), 282, 303, 306–9 

African Growth and Opportunities 

Agreement (AGOA), 305 

Agence France Presse, 332 

agency theory, 124 

AGOA, see African Growth and 

Opportunities Agreement (AGOA) 

Agricultural Bank of China, 94 

AIC, see Akaike Information Criterion 

(AIC) 

Akaike Information Criterion (AIC), 

47, 62 

Aluminum Corporation of China, 25 

American Automobile Association 

(AAA), 341 

American Eastern International (AEI), 

330, 331 

Anglo-American CEO compensation, 

132 

Animal Kingdom, 340 

Anshan Iron & Steel Group Corporation 

Apax, 91 

APF, 262 

Aprilia, 364 

Areva T&D, 91 

ASEAN, see Association of Southeast 

Asian Nations (ASEAN) 

Asia, 88 

Asia Pacific Foundation of Canada, 50, 

179 

Asian-African Bandung Conference, 281

406 Subject Index 

Asian capitalism, 219 

Asian Driver program, 303, 312 

Asian Tigers, 315 

Asian Trade Center, 340 

assembling industries, 31 

asset exploration, 119 

Associated Press, 346 

Association of Southeast Asian Nations 

(ASEAN), 376 

AST Computers, 143 

ATLAS.ti, 220 

AU, 320 

Audi, 116, 384 

Australia and New Zealand Bank, 95 

automobile industry, 8, 377–80 

see also Geely Automobile Holdings 

Limited (Geely Auto) 

Aviation Industry Corporation of 

China, 27 

Aviva, 95 

bamboo capitalism, 6 

Bandung Conference of Non-Aligned 

Nations, 300 

Bank of China, 90, 94, 341 

Baosteel Group Corporation, 30, 236 

BBC News, 281 

Beastie Boys, 344 

Beijing Olympics, 185 

Benelli, 8 

acquisition of, 356–8, 366–7 

post-, phase of, 367–70 

industrial activities, 368–9 

operational changes, 367–8 

organizational changes, 367–8 

sales activities, in commercial 

network, 369–70 

problem analysis of, 370–1 

by Qianjiang Group, 358–61 

international expansion of, 360–1 

strengths of, 359–60 

‘Benelli Garage,’ 356 

BG Group, 95 

BHP, 264, 272 

Big Blue, 145 

Black Rock, 91 

Blackstone Group, 31, 91, 259 

Bluesky, 360 

BMW, 116, 384 

Boateng, 55 

PROOF 

BOE, 41 

Bok Tower, 341 

Boston Consulting Group, 148 

BP Plc, 95 

BRIC motorcycle market, 360 

Brookhill LLC, 339–40 

bureaucratic administration, 16–22 

Business China, 147 

Business Source Premier, 93 

Business Wire, 339 

BYD Auto, 107 

CACCP, see Citizens against Communist 

Chinese Propaganda (CACCP) 

Cadbury, 95 

CAGR, 362 

Canada, 257–74 

Chinese Investment Corporation 

in, 88 

Chinese outward foreign direct 

investment in, 261–3 

foreign direct investment in, 6, 

260–1 

game modeling in, 263–4 

interpretation of, 268–71 

key players, 265–7 

Petro-China, 271–2 

research on, 264–8 

structure of, 267–8 

investment by Chinese 

state-controlled entities in, 6 

state controlled funds and entities in, 

258–60 

closed, 269 

open, 269 

predictions of, 270–1 

restricted access to, 269–70 

Cape Canaveral military base, 335 

Capital Iron & Steel, 30 

capital movements theory, 12–13 

capitalism 

Asian, 219 

bamboo, 6 

liberal market model of, 218–19 

theory of, 218 

western-style, 330 

CAS, see Chinese Academy of Sciences 

(CAS)

CCPIT, see China Council for the 

Promotion of International Trade 

(CCPIT) 

CDB, see China Development Bank 

(CDB) 

CECIE, see China Export & Credit 

Insurance Cooperation (CECIE) 

CEMEC, 313 

Center of Competitiveness, 90, 93 

Central Florida Future, 345 

Central Huijin Investment Company, 

87, 90, 99 

CEO compensation 

Anglo-American aspect of, 132 

Granger causality tests for, 127–8 

methodology for, 128 


variables for, 127, 128 

internationalization and, 125–7 

reverse causation between, 125–32 

Chemical Engineering Machinery 

Factory, 358 

Chesapeake Energy, 91 

Chicago Sun Times, 337 

China 

automobile industry, role in 

globalization of, 8, 377–80 


in, 88 

‘Go Global’ policy in, 11 

gross domestic product of, 11 

motorcycling industry in, 364–6 

outward foreign direct investment 

from, global, 109–10, 234–8 

characteristics of, 238–9 

development of, 238–9 

theoretical perspectives on, 109–10 

state in, institutional perspective on 

role of, 1 

two-step currency reform in, 44 

China Construction Bank, 90, 94 

China Council for the Promotion of 

International Trade (CCPIT), 180, 

262 

China Daily, 385 

China Desk or Investment Office, 165 

China Development Bank (CDB), 22, 94 

China Everbright Bank, 94 

China Export & Credit Insurance 

Cooperation (CECIE), 22 

PROOF 

Subject Index 407 

China Forum Bayer, 222 

China Goes Global Conference, 230, 274 

China Guangdong Nuclear Power 

Holding Co., Ltd., 27 

China Huaneng Group, 26 

China Investment Promotion Agency 

(CIPA), 166, 181 

China Jianyin Investment Company, 87, 

365 

China Merchants Group, 25 

China Metallurgical Group 

Corporation, 26 

China Mimetals Corporation, 25, 257, 

260–263, 270, 272 

China Mobile Communications 


China National Aviation Holding 


China National Cereals, Oils & 

Foodstuffs Corporation, 25 

China National Chemical 


China National Offshore Oil Company 

(CNOOC), 25, 49, 239, 257, 260, 269 

China National Petroleum Corporation, 

25, 271 

China Noferrous Metal Mining & 

Construction (Group) Co., Ltd., 26 

China North Industries Group 


China Ocean Shipping (Group) 

Company, 25 

China Petrochemical Corporation, 25 

China Poly Group Corporation, 27 

China Power Investment 


China Railway Hong Kong, 94 

China Reinsurance, 94 

China Resources (Holdings) Co., Ltd., 25 

China Rules, 1, 391 

China Security Regulation Committee 

(CSRC), 127 

China Shipping (Group) Company, 25 

China State Construction Engineering 


China Telecom, 264 

China Travel Service (CTS) Ltd., 329, 

331, 340 

China Unicom Corporation, 26 

Chinese Academy of Sciences (CAS), 143


Chinese brand, 28, 118 

Chinese Communist Party, 15, 50 

Chinese EXIM Bank, 281, 310, 

314, 319 

Chinese Folk Culture Villages, 329 

Chinese foreign direct investment 

in Canada, 6 

in Europe, 4–6 

global, case studies on, 7–8 

inflow-outflow ratio of, 38 

macro-environmental determinants 

of, 1–3 

micro-environmental determinants of, 

3–4 

in North America, 6 

outward, in Africa, 6–7 

Chinese Government, ‘open-door’ policy 

by, 97 

Chinese ‘insatiable appetite,’ 236 


(CIC), 3, 31, 81, 86, 87, 89, 

257, 259 

Annual Report by, 88 

in Asia, 88 

in Blackstone Group, 31 

board of directors for, 87 

in Canada, 88 

in China, 88 

establishment of, 81, 259 

funding for, 86 

global expansion of, 81 

headquarters for, 86 

in Hong Kong, 88 

investment strategy of, 3, 98 

in Morgan Stanley, 31 


ownership by, 90 

purpose of, 86 

SAFE, competition with, 81 

Transparency Index of, 100 

website for, 88 

Chinese mergers and acquisitions, 41 

cross-border, 142–50 



combinative capabilities, 144–5 

knowledge of business, 143–4 

strategy for, effective execution, 

145–7 

PROOF 





strategy for, problematic execution 

of, 149–50 

Chinese Ministry of Commerce 

(MOFCOM), 98–9, 285, 304 

Chinese Ministry of Finance, 285, 366 

Chinese Ministry of Industry and 

Technology Information, 366 

Chinese Ministry of Science and 

Technology, 366 

Chinese multi-national enterprises, 

advantages of, 109 


investment, 234–8 

in Africa, 6–7, 279–96 



theory and hypothesis on, 

279–90 

in Canada, 261–3 


in China, theoretical perspectives on, 

109–10 

country of origin and, role of, 2, 

54–75, see also vector 

autoregressive (VAR) model 

development of, 238–9 

empirical analysis of determinants 

of, 2 


institutional perspective on 

formal, 15–27 

informal, 27–8 

key driving forces of, 41 

macroeconomic determinants of, 

38–50 

methodology and data for, 

46–7 

model and hypothesis for, 

43–6 

motivations for, 12–14 

multi-national enterprises, 28–9 

industry of, choice of, 31–2 

institutional influence on, 28–9 

location of, choice of, 30 

mode of, choice of, 29–30 

strategic choices of, 29–32

policy implications for, 318–21 

strategic capabilities, development 

of, 318–20 

state for, role of, 14 

in Sub-Saharan Africa, 7 

vector autoregressive model, 58–63 

analysis of, 66–72 

exogeneity, tests for, 63–6 

volume statistics of, 11 

Chinese sovereign wealth funds, 85–96, 

88, 98, 99, 101 


government policy behind, 97–8 

investment strategies of, 87–96 

issues concerning, 99–101 

private policy behind, 98–9 

purpose of, 85–6 

Chinese State Council, 358 

Chongqing Loncin Industry Co., Ltd., 

365 

Chrysler, 115, 141 

CIC, see Chinese Investment 

Corporation (CIC) 

CIPA, see China Investment Promotion 

Agency (CIPA) 

CIS, see Commonwealth of Independent 

States (CIS) 

Citic Capital Holdings Ltd., 91 

CITIC Group, 25 

Citizens against Communist Chinese 

Propaganda (CACCP), 346 

closed state controlled funds and entity, 

269 

cluster theory, 240 

CNOOC, see China National Offshore 

Oil Company (CNOOC) 

Coca Cola, 339 


‘coming in’ investment streams, 235 

Commercial Bank of China, 305 

commercial hubs, 164 

Commonwealth Bank of Australia, 95 

Commonwealth of Independent States 

(CIS), 181 

competition effect, 179 

Conference Board of Canada, 260, 269, 

272 

cost reducing foreign direct investment, 

315 

PROOF 


Countries and Industries for Overseas 

Investment Guidance Catalog, 4,159 

country image, 28 

cross-border Chinese mergers and 

acquisitions, 28, 142–50 






145–7 






of, 149–50 

CSRC, see China Security Regulation 

Committee (CSRC) 

CTS, see China Travel Service (CTS) Ltd. 

Cypress Gardens, 341 

Daimler Benz, 141 

Dalai Lama, 340, 343, 346 

Darfur, 281 

Data Appendix, 58 

Datamonitor – Company, 93 

Days Inn, 340, 348 

De Tomaso Industries, Inc., 356 

Dell, 145 

demonstration effect, 180 

Department of Foreign Capital and 

Overseas Investment (DFCOI), 16, 

21, 22 

Department of Outward Investment and 

Economic Cooperation (DOIEC), 

22, 38 

dependent variable, 43 

Detroit International Auto Show, 386–7 

Deutsche Bank Research 

developed nations, 264 

development funds, 83 

DFCOI, see Department of Foreign 

Capital and Overseas Investment 

(DFCOI) 

DG Trade, 181 

Diageo, 91 

Disney-MGM Studios, 333 

Disney World, 330–1, 333, 347 

diversification, international, 123–4


DOIEC, see Department of Outward 

Investment and Economic 

Cooperation (DOIEC) 

double-edged sword, 32 

Drax Group Plc, 95 

Drivetrain Systems International (DSI), 

115 

Ducati, 364 

dummies, 128 

Eclectic Paradigm Theory, 39, 177, 

314–15 

Economic Intelligence Unit (EIU), 285, 

303 

‘Economic Observer, The,’ 14 

Economist, The, 330, 344 

Economist.com 

economy, openness of, 45 

ECOWAS, 320 

educated tourists, 335 

efficiency-seeking, 112 

EIBC, see Export-Import Bank of China 

(EIBC) 

EIU, see Economic Intelligence Unit 

(EIU) 

EME, see emerging market enterprise 

(EME) 

emerging market enterprise (EME), 

12–13, 28–9 

Encyclopedia Britannica, 263 

Enterprise Institute of Development 

Research Center of the State 

Council, 16 

Epcot Center, 333 

Ericsson, 187 

ethnic enclave, 240 

Europe 


investment in, 4–6, 157–72 

pull factors for, 163–7 

push factors for, 158–63 

rise of, 175–93 

foreign direct investment in, Chinese, 

4–6 

Investment Promotion Agency in, 4 

outward foreign direct investment in, 

Chinese, 157–72 

conceptualizations of, 180–1 

pull factors for, 163–7 

push factors for, 158–63 

PROOF 

rise of, 175–93 

theoretical models for, 176–80 

small-to-medium-sized Chinese 

enterprises in, 234–52 


ethnic enclave, 240–1 

industrial districts, 239–40 

Prato, 245–51 

scoping study on, 241–2 

European Journal of Development Research, 

321 

European Union, Chinese outward 

foreign direct investments in, 5, 

167–70 

competition of, 188–90 

entry mode for, 187–8 

evidence of, 181–93 

locations for, 181–7 

perspectives on, 170–2 

exchange rate, 44–5, 48–9 

exogeneity tests, 63–6 

Export-Import Bank of China (EIBC), 22 

Falun Gong religious movement, 346 

Fantasy of Flight, 341 

FAO, 312 

Far Eastern Economic Review, 341 

FDI, see foreign direct investment (FDI) 

Federal Bureau of Investigation, 335 

financial investors, 83 

Financial Times, 88, 164 

firm age, 128 

firm size, 128 

Florida Historical Quarterly, 350 

Florida Splendid China (FSC), 329–50 

conception of, 330–1 

construction of, 332–5 

controversies in 

protests for, 343–6 

Tibetan display, 343–4 

opening, 336–8 

preparations for, 335–6 

park design for, 331–2 

promoting, 338–40 

struggles of, 341–3 

Sunny Yang as president of, 340–1 

Flying Tigers, 344 

FOCAC, see Forum for China African 

Cooperation (FOCAC) 

‘follow the command’ approach, 226

Forbidden City, 332 

Ford, 107, 115, 116, 385 

forecast error variance decomposition, 

66–72 

foreign currency reserves, 46 

foreign direct investment (FDI) 

in Canada, 260–1 

Chinese 

in Canada, 6 


in Germany, 5–6 

global, case studies on, 7–8 

inflow-outflow ratio of, 38 

macro-environmental determinants 

of, 1–3 

micro-environmental determinants 

of, 3–4 


outward, in Africa, 6–7 

by Chinese manufacturing firms, 

107–20 

case study method for, 110 

cross-, analysis of, 117–19 

Geely Holding Group, 115–17 

motives for, 117–18 

patterns of, 118–19 

Sany Group, 110–13 

single, analysis of, 110–17 

Wanxiang Group, 113–15 

cost reducing, 315 

from developed countries 

extension of, 108–9 

theories, traditional, 108 

leveraging, 315 

market-seeking, 315 

resource-seeking, 315 

South-South, 177–8 

theoretical foundation for, 

108–10 

foreign exchange policy, 15, 21 

foreign government-controlled 

company, 260 

formal Chinese outward foreign direct 


bureaucratic administration, 

16–22 

government ownership, 22–7 

policies, 15–16 

Fortescue Metals Group, 91 

Fortune, 137, 138, 142 

PROOF 


Forum for China African Cooperation 

(FOCAC), 321 

‘four dragons,’ 30 

‘four tigers,’ 30 

Fourteen Chinese Communist National 

Congress, 15 

FSC, see Florida Splendid China (FSC) 

fund managers, 82 

Galanz, 49 

game modeling, 6, 263–4 

interpretation of, 268–71 

key players, 265 

interests and concerns of, 

265–7 

Petro-China, 271–2 

research on, 264–8 

structure of, 267–8 

‘Gateway to Europe,’ 184 

Gateway Tours, 340 

GCL-Poly Energy Holdings Ltd., 92 

GDH Limited, 26 

GDP, see gross domestic product (GDP) 

Geely Automobile Holdings Limited 

(Geely Auto), 115, 117, 377 

Geely Holding Group (Geely), 107, 110, 

115–17 

future outlook of, 387–8 

global brand, establishment of, 

386–7 

international role of, development of, 

383–4 

limited holdings in, 380–7 

overseas investment by, 115–16 

market-seeking and, 116 

motives of, 116 

Volvo, acquisition of, 116, 

384–5 

overview of, 115 

performance of, overview of, 

382–3 

resource augmentation and control, 

degree of, 116–17 

strategic asset-seeking by, 116 

strategic shifts by, 385–6 

General Motors, 107 

Generalized Least Squares, 290 

generalized method of moments (GMM), 

128 

Generic, 360–1


Germany, Chinese mergers and 

acquisitions in, 212–30 

absorptive capacity of, 215–20 

multidimensional perspective of, 

219–20 

multilevel perspective on, 216–19 

preferred research method for, 220–2 


5–6 

integration of, 213–15 

Sany Group in, motives for, 111–12 

GFC, see global financial crisis (GFC) 

GIC, 86 

global brand, 386–7 

‘Global Champions,’ 236–7, 244 

global financial crisis (GFC), 236 

global foreign direct investment, 


Globalization of Chinese Enterprises, 1, 391 

GMM, see generalized method of 

moments (GMM) 

GNP, see gross national product (GNP) 

‘Go Global’ policy, 3, 11, 15, 49, 98–9, 

158, 236 

‘going abroad’ policy, 15 

‘going out’ investment streams, 235 

Golden Peacock Theater, 339 

Goldman Sachs, 144 

Goodman Group, 92 

Government of Canada, 260 

Government of Singapore Investment 


government ownership, 22–7 

GoVideo, 149 

Granger causality tests, 2, 127–8 

control variable for, 128 

methodology for, 128 


variables for, 127 

Great Wall, 333, 348 

greenfield operations, 239 

gross domestic product (GDP), 11 

gross national product (GNP), 43–4 

Guangdong National Shipping 


Guangzhou Yuexiu Holdings Limited, 26 

Gulliver’s Travels, 331 

H2, 130–1 

Haier, 41, 49, 236 

PROOF 

Handelsblatt, 281 

Hannan-Quinn Criterion, 62 

Harley Davidson, 362 

Harvard University, 230, 274 

heavyweight industries, 50 

Hewlett-Packard, 143 

‘Hidden Champion,’ 212 

Hierro Peru Mining, 30 

Holley Group, 282, 310 

Honda, 362, 364 

Hong Kong, 88 

Hong Kong Stock Exchange, 115, 329 

Houston Chronicle, 337 

HP-Compaq, 146 

Huawei Technologies, 282, 310 

Huaweik Technologies, 26, 49, 236 

Hunan Valin Iron & Steel (Group) Co., 

Ltd., 26 

Hungary, 166 

IB, see international business (IB) 

IBM, 43, 138, 143 

IBM Personal Computing (PC) business, 

143–7 

ICA, see Investment Canada Act (ICA) 

ICT, see information communication 

technology (ICT) 

Idea Center, 145 

IdeaPad, 145 

IDT Hungary, 166 

IFR, see impulse response function (IRF) 

IMF, 75, 83, 89, 101, 303, 312, 319 

impulse response function (IRF), 69 

impulse response analysis, 66–72 

income, 43–4 

independent variables, 43–6 

exchange rate, 44–5 

foreign currency reserves, 46 

income, 43–4 

interest rate, 45 

openness of economy, 45 

technology, 43 

Indesit Group, 356 

individual absorptive capacity, 220 

individual influence, 216 

industrial activities, 368–9 

Industrial and Commercial Bank of 

China, 94, 309 


Industry Canada, 266

inflow-outflow ratio of Chinese foreign 

direct investment, 38 

InFocus Corp., 150 

informal Chinese outward foreign direct 


information communication technology 

(ICT), 235 

‘insatiable appetite,’ Chinese, 236 

institutional influence, ‘dark side’ of, 32 

intangible resources, 4 

Intel Capital, 92 

interest rate, 45 

internalization, 13, 316 

international business (IB), 13, 258 

International Campaign for Tibet, 343 

international diversification, 123–4 

International Lease Finance 


internationalization, 12, 122–34, 125–7, 

130 

CEO compensation and 

Granger causality tests for, 127–8 

reverse causation between, 125–7 

hypothesis for, 123–5 

of multi-national enterprises, 108 

theoretical framework for, 123–5 

Invest in Germany, 185, 195 

Investment Canada Act (ICA), 260, 261, 

266, 269 

Investment Development Path (IDP), 2, 

38, 42, 43–4, 108 

investment funds, 85 

Investment Promotion Agency (IPA), 5, 

157 

in Europe, 4, 180–1 

in Hungary, 166 

in Poland, 167 

investments 

of Chinese Investment Corporation, 

3, 98 

by Chinese state-controlled entities, 6 

inward, 304 

in Italy, 6 

return on, 3 

for sovereign wealth funds, 87–96 

inward investment, 304 

IPA, see Investment Promotion Agency 

(IPA) 

Italian Piaggio Group, 364 

PROOF 


Italy 


5–6 

motorcycling industry in, 362–4 


enterprises in, 242–5 

trade and investment in, and Chinese 

diaspora in, 6 

Japan Bank for International 

Cooperation Institute (JBICI), 

179–80 

JBICI, see Japan Bank for International 

Cooperation Institute (JBICI) 

JC Flowers PE Fund, 92 

Jiangmen Grand River Group Co. Ltd., 

365 

Jinchuan Group Limited, 27 

joint venture (JV), 239 

JSC KazMunaiGas Exploration 

Production, 92 

JV, see joint venture (JV) 

k-step-ahead forecast, 66 

Kawasaki, 362, 364 

Keeway, 360–1 

Kennedy Space Center, 335 

knowledge, 4, 143–4, 219 

KPSS, see Kwiatkowski-Phillips- 

Schmidt-Shin (KPSS) test 

KW, 370 

Kwiatkowski-Phillips- Schmidt-Shin 

(KPSS) test, 61 

latecomer firms, 109 

Lee-Potter, 244 

Legend Holdings Ltd., 26 

Lenovo (Legend Group), 41, 43, 

138, 236 


IBM Personal Computing (PC) 

business, acquisition of, 143–7 


strategy for, effective execution, 145–7 

Lenovo University, 144 

leveraging foreign direct investment, 315 

LG.Philips LCD Co., 150 

liberal market model of capitalism, 

218–19 

light touch approach, 214–15, 219


limited holdings, 380–87 

Linaburg, Carl, 100 

Linaburg-Maduell Transparency Index, 

100 

linkage, leverage, and learning (LLL) 

model, 109 

linkages driver, 315 

Lion Group, Malaysia’s, 360 

listening posts, 179 

LLL, see linkage, leverage, and learning 

(LLL) model 

local enterprises, 264, 266 

location-bound approach, 55 

London Olympics, 185 

London Stock Exchange, 96 

Lung Ming, 92 

MachineA, 224–7 

MachineB, 227–8 

MachineCN, 227–8 

macro-environmental determinants of 

Chinese foreign direct investment, 

1–3 

China, institutional perspective on 

role of state in, 1 

outward foreign direct investment, 

Chinese, 2 

sovereign wealth funds, 2–3 

‘Made-in-Germany’ brand, 228 

Magic Kingdom, 333 

Manganese Bronze Holdings, 115 

manufacturing firm investments, 

motives and patterns of Chinese, 3 

Marco Polo, 333 

market knowledge, 219 

market-seeking foreign direct 

investment, 315 

M&As, see mergers and acquisitions 

(M&As) 

McKinsey & Company, 144 

McKinsey Global Institute, 313 

MENA, see Middle East and North Africa 

(MENA) 

Mercedes-Benz, 116, 384 

mergers and acquisitions (M&As), 239 

Chinese cross-border, 41, 142–50 

cross-border, 41, 212–13 




PROOF 



145–7 






of, 149–50 

MFA, see Ministry of Foreign Affairs 

(MFA) 

MG Rover Group, 188, 385 

Miami Herald, 344 

micro-environmental determinants of 

Chinese foreign direct investment, 

3–4 

manufacturing firm investments, 

motives and patterns of Chinese, 3 

strategic assets, integration of 

knowledge and intangible 

resources into, 4 

Middle East and North Africa 

(MENA), 84 

Ministry of Commerce (MOFCOM), 11, 

21, 22, 38, 46, 87, 98, 107, 159, 180 

Ministry of Domestic Commerce, 21 

Ministry of Finance (MOF), 22, 86, 87 

Ministry of Foreign Affairs (MFA), 21, 98, 

159 

Ministry of Foreign Trade and Economic 

Cooperation (MOFTEC), 15, 21, 98 

Ministry of Science and Technology of 

the People’s Republic of China 

(MOST), 47 

Ministry of Taxation (MOT), 22 

MNC, see multinational company (MNC) 

MNE, see multi-national enterprises 

(MNE) 

MOC, 15 

Modern Cikande Industrial Estate, 

Indonesia’s, 360 

MOF, see Ministry of Finance (MOF) 

MOFCOM, see Ministry of Commerce 

(MOFCOM) 

MOFTEC, see Ministry of Foreign Trade 

and Economic Cooperation 

(MOFTEC) 

monetary policy, 21 

Morgan Stanley, 31, 92 

Morini, 364

MOST, see Ministry of Science and 

Technology of the People’s Republic 

of China (MOST) 

MOT, see Ministry of Taxation (MOT) 

Moto Guzzi, 356 

Motobi, 356 

MotoGp, 369 

motorcycling industry 


global trends in, 362 

local trends in 

in China, 364–6 

in Italy, 362–4 

multi-national enterprises (MNE), 11, 

28–9 

Chinese, advantages of, 109 


institutional influence on, 

28–9 

internationalization of, 108 

location-bound approach to, 55 



outward foreign direct investment by, 



institutional influence on, 28–9 



strategic choices of, 29–32 

strategic choices of, 29–32 

universalist approach to, 55 

Multifiber Agreement, 305 

multinational company (MNC), 54 

MV, 364 

Nam Kwong (Group) Company 

Limited, 27 

Nanjing Automobile, 188 

Napoleon, 11 

national absorptive capacity, 220 

National Australia Bank, 95 

National Bureau of Statistics of China 

(NBS), 46–7 

National Council, 87 

National Development and Reform 

Commission (NDRC), 87, 159, 161, 

366 

national identity, 28 

national influence, 216 

PROOF 


National Natural Science Foundation of 

China, 120 

National Planning Commission (NPC), 

15, 16 

see also State Development and Reform 

Commission (SDRC) 

NBS, see National Bureau of Statistics of 

China (NBS) 

NDRC, see National Development and 

Reform Commission (NDRC) 

neo-Marshallian cluster concept, 240 

NEPAD, 320 

net benefit test, 260 

Nobel Group, The, 93 

Nobel Oil Group, 93 

Noranda, 257, 260, 262–3, 269 

North America 

in Canada, investment by Chinese 

state-controlled entities in, 6 


in, 88 

foreign direct investment in, 

Chinese, 6 

NPC, see National Planning Commission 

(NPC) 

Oaktress Capital Management, 93 

OECD, 75, 89, 234, 240, 257, 259, 314 

OEM, see original equipment 

manufacturer (OEM) 

OFDI, see outward foreign direct 

investment (OFDI) 

offshore mergers and acquisitions 

(OMA), 41 

OICA, 378 

OLI, see ownership, location, 

internalization (OLI) 

OLS, see ordinary least squares (OLS) 

OMA, see offshore mergers and 

acquisitions (OMA) 

‘100 Day’ program, 222 

‘open-door’ policy by Chinese 

Government, 15, 97, 236 

open state controlled funds and entity, 

269 

openness of economy, 45 

operational changes, 367–8 

ordinary least squares (OLS), 128 

organizational absorptive capacity, 220 

organizational changes, 367–8


organizational influence, 216 

original equipment manufacturer 

(OEM), 187 

Orlando Business Journal, 341 

Orlando International Airport, 338 

Orlando Sentinel, 336, 341 

outside director ratio, 128 

outward foreign direct investment 

(OFDI) 

approval authority for, 16 

boundaries of, 15–16 

global statistics of, 11 

growth rate for, 11 

institutional framework for, 

15, 16 

via mergers and acquisitions, 11 

see also Chinese outward foreign 

direct investment 

ownership, location, internalization 

(OLI), 11, 39, 108, 315 

Palgrave, 391 

PBC, see People’s Bank of China (PBC) 

Penn West Energy Canada, 93 

pension reserve funds, 83 

People for the Ethical Treatment of 

Animals (PETA), 343 

People’s Bank of China (PBC), 21, 85, 86, 

87, 88 

People’s Palace, 319 

PETA, see People for the Ethical 

Treatment of Animals (PETA) 

Petro-China, 258, 260, 271, 272 

Philips, 187 

PMI, see post-merger integration (PMI) 

Poland, 167 

Politburo, 236 

portfolio investments, 83 

post-merger integration (PMI), 214 

Potala Palace, 343, 344 

Potash Co., 264, 272 

potential absorptive capacity, 215 

Powertrain Ltd., 385 

Prato, 245–51 

PRC Political Consultative Conference, 

337 

predictive causality, 73 

private policy, 98–9 

processing industries, 31 

product knowledge, 219 

PROOF 

Pronto Moda business model, 

248 

Proper Glory, 380 

psychic distance, 108, 177 

PT Bumi Resources Tbk, 93 

PT Sanex, Indonesia’s, 360 

‘pull’ factors, 50 

Qianjiang Group (QJ), 358–9 

international expansion of, 360–1 

strengths of, 359–60 

Qianjiang Motor Company 

QJ, see Qianjiang Group (QJ) 

‘quasi-government’ corporation, 345 

RCA, 148 

R&D, see research and development 

(R&D) 

realized absorptive capacity, 

215, 227 

‘reform and opening policy,’ 217 

research and development (R&D), 184, 

239 

reserve investment corporations, 83 



resource-seeking foreign direct 

investment, 315 

return on investment, 3 

return on sales, 128 

reverse causation, 125–32 

reverse spillovers, 179 

Rio Tinto, 95 

RMB, 44, 48–9, 85–6 

Rolling Oaks Investment Properties LLP, 

348 

Royal Dutch Shell, 96 

SADC, 320 

SAFE, see State Administration of Foreign 

Exchange (SAFE) 

SAFE Investment Company, 96 

St. Petersburg Times, 344 

sales activities, in commercial network, 

369–70 

Samsung, 143 

Sanex Qianjiang Motor International, 

360 

Santiago Principles, 101

Sany Group (Sany), 110–13, 117 

efficiency-seeking by, 112 

overseas investment by, 111 

in Germany, motives for, 111–12 

overview of, 110–11 

resource augmentation and control by, 

112–13 


Sany Heavy Industry Co., Ltd. (Sany 

Heavy), 111 

SASAC, see State-owned Assets 

Supervision and Administration 

Commission (SASAC) 

savings funds, 83 

SCFE, see state controlled funds and 

entity (SCFE) 

Scharwz Criterion, 62 

Schneider Corp., 149 

School of Oriental and African Studies, 

University of London, UK, 193 

SDC Platinum, 221 

SDRC, see State Development and 

Reform Commission (SDRC) 

SE, see standard error (SE) shock 

Sea World, 330, 347 

SEQ, see simultaneous equation (SEQ) 

model; structural equation (SEQ) 

model 

‘setting up enterprises overseas’ 

concept, 15 

Severn Trent, 96 

SEZ, see Special Economic Zones (SEZ) 

Shanghai Automotive Industry 

Corporation, 27, 377 

Shanghai Baosteel Group Corporation 

Shanghai Institutions of Higher 

Learning, 151 

Shanghai LTI Automobile Components 

Company Limited, 115 

Shanghai Overseas United Investment 

Co., Ltd. 

Shanghai Stock Exchange, 111, 

127, 217 

shareholder value, 316 

Shenhua Group Corporation, 27 

Shenzhen Investment Holdings Co., 

Ltd., 27 

Shenzhen Stock Exchange, 127, 

217, 359 

Shougang Corporation, 27 

PROOF 


Shum Yip Holdings Company 

Limited, 26 

Sichuan Tengzhong Heavy Industrial 

Machinery Co Ltd. (Tengzhong), 107 

simultaneous equation (SEQ) model, 58 

Sino-African Business Conference, 304 

Sinohem Corporation, 25 

Sinohydro Co., Ltd., 27 

Sinopec, 49, 236 

SinoSteel Corporation, 25 

SINOTRANS Changjiang National 

Shipping (Group) Corporation, 25 

‘sleeping dragon’, see China 


enterprise (SME), 234–52 


ethnic enclave, 240–1 


Prato, 245–51 

scoping study on, 241–2 

SME, see small-to-medium-sized Chinese 

enterprise (SME) 

Social Security Fund, 87 

SOE, see state-owned enterprises (SOE) 

SOE ZTE, 317 

Songbird Estates, 93 

Sony, 143 

South Africa’s Standard Bank, 309 

South Gobi Energy Resources, 93 

South-South foreign direct investment, 

177–8 

sovereign wealth fund (SWF), 2–3, 

81–101, 100, 258 

Chinese, 85–96, 88, 98, 99, 101 


government policy behind, 97–8 

investment strategies of, 87–96 

issues concerning, 99–101 

private policy behind, 98–9 

purpose of, 85–6 

defined, 82, 259 

features of, 82–4 

global trends in, 84 

strategic objectives of, 101 

transparency of, 100 

types of, 82–3 

Special Economic Zones (SEZ), 171 

Splendid China Day, 336, 344 

Ssangyong Motors, 115 

stabilization funds, 83


Stadium of the Martyrs, 319 

standard error (SE) shock, 69 

State Administration of Foreign 

Exchange (SAFE), 15, 22, 42, 47, 49, 

81, 86–9 

China Investment Corporation, 

competition with, 81 

investment strategy of, 98 

Transparency Index of, 100 

state controlled funds and entity (SCFE), 

257, 264 

in China, 258–60 

closed, 269 

open, 269 

predictions of, 270–1 

restricted access to, 269–70 

State Council, 15, 16, 87 

State Development and Reform 

Commission (SDRC), 15, 16, 22 

State Economic and Trade Commission, 

97 

State Grid Corporation of China 

state of China, institutional perspective 

on role of, 1 

State-owned Assets Supervision and 

Administration Commission 

(SASAC), 22, 50 

state-owned enterprises (SOE), 11, 22, 

49, 217 

state shareholding, 128 

strategic investors, 83 

Statistical Bulletins of Chinese Outward 

Foreign Direct Investment, 180 

strategic assets, 116, 140 

applying, 141–2 

intangible resources and, 4 

integrating, 140–1 

knowledge and, 4 

understanding, 140 

strategic industries, 50 

structural equation (SEQ) model, 58 

Sub-Saharan Africa, Chinese foreign 

direct investment flows to, 300–22 

distinctiveness of, 311–17 

resources, 311–13 

trade reversal, 311–13 

dynamics of, 300–3 

eclectic theory of, 314–15 

estimates of, 303 

PROOF 

African Economic Research 

Consortium scoping study, 

306–9 

official, 303–6 

public-domain, 303–6 

United Nations Industrial 

Development Organization 

survey, 309–10 

outward, 7 

small private sector, studies of, 310–11 

strategic integration of, 313–14 

Suntec Power Holding, 107 

Suzuki, 362 

SWF, see sovereign wealth fund (SWF) 

SWF Institute, 88, 96 

TAMP, see TCL & Alcatel Mobile Phones 

Limited (TAMP) 

Tampa Tribune, 341 

Tate & Lyle, 96 

TCL & Alcatel Mobile Phones Limited 

(TAMP), 150 

TCL Group Company, 27, 41, 43 

Tech Resources Limited, 93, 257 

Temasek, 86 

Theory of Games and Economic Behavior 

(Morgenstern and von Neumann), 

263 

ThinkPad, 144, 146 

ThinkVantage, 144 

‘Third World Solidarity,’ 300 

Thomson’s TV, 43, 138, 147–50 

Tibetan display, 343–4 

Tibet’s Potala Palace, 332 

Times Picayune, 337 

TLC, failed acquisition of Thomson’s TV 

business, 41, 147–50 



strategy for, problematic execution of, 

149–50 

TNC, see transnational company (TNC) 

TOL, see transactive organizational 

learning (TOL) 

Total SA, 96 

TPG Fund, 96 

trade in Italy, 6 

trade reversal, 311–13 

transactive organizational learning 

(TOL), 225

transnational company (TNC), 167 

Transparency Index, 100 

Triumph, 364 

Tsing Tao Beer, 339 

TUV Company, 360 

two-step currency reform in China, 44 

UBS, 84 

UNCTAD, see United Nations 

Conference on Trade and 

Development (UNCTAD) 

UnctadStat, 234 

UNIDO, see United Nations Industrial 

Development Organization 

(UNIDO) 

United Nation Statistics Division 

Statistical Database, 11 

United Nations Conference on Trade 

and Development (UNCTAD), 38, 

54, 178 

United Nations Industrial Development 

Organization (UNIDO), 303, 309–10 

U.S. Department of Justice, 346 

U.S. Treasury, 85 

universalist approach, 55 

University of Central Florida, 350 

University of Fribourg, 90, 93 

University of London Central Research 

Fund, 193 

Unocal, 257 

VAR, see vector autoregressive (VAR) 

model 

vector autoregressive (VAR) model, 54–5, 

58–63 


forecast error variance 

decomposition, 66–72 

impulse response analysis, 66–72 

exogeneity tests for, 63–6 

Visa Inc., 93 

Volvo, 107, 115–17, 384, 385 

acquisition of, 116, 384–5 

market-seeking and, 116 

motives of, 116 


Wanxiang America Corporation, 113 

Wanxiang Group (Wanxiang), 110, 

113–15, 117 

overseas investment by, 113 

in United States, motives by, 114 

overview of, 113 




‘we versus they’ antagonism, 215 

wealth creation, 41 

Wenling Electric Tools Factory, 358 

Wenling Locomotive Factory, 358 

Wenling Saccharification Factory, 358 

Wenling Vehicle Repair Factory, 358 

western-style capitalism, 330 

wholly-owned foreign enterprise 

(WOFE), 218 

‘Win-Win’ cooperation, 225 

WIR, see World Investment Report (WIR) 

WOFE, see wholly-owned foreign 

enterprise (WOFE) 

World Bank, 288, 313 

World Investment Report (WIR), 11 

World Trade Organization (WTO), 16, 

44, 127, 236, 264, 347, 379, 391 

WTO, see World Trade Organization 

(WTO) 

Wuhan Iron & Steel (Group) Co., Ltd., 27 

Xiaolin Supermarket, 246 

Xinhua, 137 

Xinjiang Zhongxin Resource Co., 

Ltd., 27 

Yamaha, 362 

year dummies, 128 

PROOF 

Zeller Corporation, 114 

Zhejiang Meikeda Motorcycle Co., Ltd., 

359 

Zhejiang Motorcycle Factory, 358 

Zhongxing ZTE Corporation, 282 

Zhongyu Auto, 385 

zou chu qu strategy, 236, 244 

ZTE Corporation, 27

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