Direct Investment of China in the Russian Automotive Sector as Part of the Global Strategy of Chinese Automakers

Abstract

This article reveals the main trends of direct investments by China in the Russian automotive industry within the context of the global strategy pursued by Chinese auto manufacturers. Through an examination of the motivations behind Chinese automakers entering into foreign markets, using the eclectic paradigm of J. Dunning, the authors draw conclusions about the prospects of Russian-Chinese cooperation in the automotive sector. It is posited that the success of Chinese automotive corporations in the global arena is primarily linked to their ongoing exploitation of advantages generated in the domestic market, which are also extended outward through foreign investments. The main investment motivations identified for Chinese automakers include market access, technology transfer, cost reduction and global expansion. The authors highlight market access and global expansion as the principal drivers of Chinese direct investments in Russia. The challenges that Russian automotive industry faced recently will not allow fully leverage the benefits of cooperation with Chinese automakers in the short term. However, substantial impact of the cooperation with Chinese partners is expected to be the deeper localization of production in Russia.