Chinese FDI in the French and Australian Wine Industries: Liabilities of Foreignness, Assets of Foreignness and Interactions with Host Country Institutions

Abstract

This paper explores the recent evolution of Chinese investment in the Bordeaux region of France and the south-western area of Western Australia (WA). It seeks to identify the key motivations for the investment as well as the difficulties experienced. Drawing on a series of interviews and reviews of press reports, as well as analysis of trade data, the paper highlights the key issues which have emerged following the growth in FDI from China in the two region’ wine sectors and interprets these in the light of existing theory of FDI (Dunning, 1993) and Liability of Foreignness (LOF) (Eden and Miller, 2004; Zaheer, 1995). We find that the key motivation for the FDI is resource seeking, although strategic asset seeking is also important, especially in the case of Bordeaux. In terms of LOF we find evidence of all three of the categories of hazards identified by Eden and Miller (2004) although the key hazard was unfamiliarity. The paper concludes with some recommendations for investors and public authorities to reduce LOF.