Abstract
As a result of the development of the “One Belt One Road” and the strategy of “Going Out” for multinational enterprises, China’s outward direct investments have grown rapidly. During the transformation period from a capital-importing to a capital-exporting country, issues of legal barriers, investment risks and insufficient investment disputes mechanism on China’s outward investment to Association of South East Asian Nations (ASEAN) have surfaced. Although ASEAN countries and China agreed on further liberalization in investment, the effects of investment agreements and Bilateral Investment Treaties on risk prevention and safeguarding investment interests have rarely been discussed and examined via empirical studies. In examine legal barriers, major investment risks, and investment dispute settlement mechanisms of China’s multinational enterprises in ASEAN States, this study selects 30 state-owned enterprises and private companies among 300 Guangdong businesses, which largely invested in ASEAN via data analyses, surveys, and interviews. Nevertheless, the obstacles in investment treatment and high political risks as a result of outward investment in ASEAN suggest that China’s multinational enterprise should start to seek multiple investment insurance either from Sinosure or the international financial institution, or advancing investment treaties and formulating a “Going-in ” strategy. The findings of this research provide a reference to Chinese multinational enterprises for the investment protection and for the launching of investment litigation of these Chinese multinational enterprises whenever it is required.
Highlights
[6] Among Guangdong’s Foreign Direct Investment (FDI) investments to the One Belt One Road” (OBOR) countries, 75.25% were flowed into the Association of South East Asian Nations (ASEAN) states, after Indian which account for 19.87% of total investment along the OBOR countries
As China has gone into the transformation period from a capital-importing to a capital-exporting country, it is indispensable to observe the effects of Investment Agreements and BITs on risk prevention and safeguarding investment interests from the perspectives of Chinese multinational enterprises.To this end, in 2016 and 2017, this studies selects 30 state-owned enterprises and private companies among 300 Guangdong business in which largely invested in ASEAN to explores major investment risks, investment disputes settlement mechanisms, and legal barriers of China’s multinational enterprises in ASEAN member states
[28] Enterprises that invested in ASEAN states confirmed that state-owned or state-controlled Chinese enterprises are keen to cooperate with enterprises of host states to form a new company in a joint venture; in contrast, private companies operate in the form of investment affiliate branches or subsidiary companies
Summary
China’s overseas investment has grown rapidly and steadily ever since the era of “One Belt One Road” (OBOR) initiative, which was first proposed by President Xi as part of the announcement of the Silk Road Economic Belt and the 21st century Maritime Silk Road in September 2013. [4] The investments to Laos and Cambodia have arisen sharply comparing to the figure of last year, China’s 4700 multinational enterprises (MNEs) established their offices in ASEAN countries with 35.3 thousands local employees and substantially invested in sectors of manufacturing (22.5%), wholesale and retail trade (17.3%), lease and business services (15.2%), transportation, storage and postal services (5.4%), financial services (5.2%)and production and supply of electricity, heat, gas and water (4.5%). The Guangdong’s FDI investments to Singapore, Thailand, Malaysia and Indonesia were reduced while the ratio to the ASEAN States with higher investment risks such as Cambodia, Myanmar and Laos were gradually increased. The principle distinctive features of China’s oversea investment are state-owned enterprises (SOEs), which supplied 49.1% of China’s total non-financial outward investment in 2017and decreased 5.2% compared to the share in 2016, whereas the non-state enterprises had reached 50.9%. Apart from Greenland investment, mergers and acquisitions (M & As) in the OBOR route that has become an essential outward investment mode reached 16.28billion USD in 2017 and soared 145% comparing to 2016, accounting for 13.6% of China’s total M & As. [10] Chinese multinational enterprises (MNEs) have been characterized to apply the Build-Operate-Transfer (BOT) and Public-Private Partnership (PPP) modes of project contracting, expanding the round-tripping investments in Chinese Hong Kong and overseas
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