Abstract
With the sample of 2571 foreign direct investment of multinational enterprises in China from 2005 to 2016, the Logit model is used in this paper to empirically test the influence of host country system differences and international experience on the success or failure of foreign direct investment by Chinese enterprises. Our empirical findings are: the greater the difference in institutional distance (whether positive or negative), the larger the possibility that foreign direct investment by Chinese enterprises will fail, that is, the institutional distance is featured by “symmetric effect” on the success or failure of foreign direct investment by Chinese enterprises; as a “distance bridging” variable, international experience has regulatory effect that weakens the negative effect of institutional distance on Chinese enterprises’ overseas direct investment success rate in the negative institutional distance, but has no regulating effect in the positive institutional distance, which is featured by “asymmetric effect”; the adjustment of institutional distance to the success or failure of foreign direct investment by Chinese enterprises has industry characteristics. When Chinese enterprises directly invest in “sensitive” industries, the adjustment effect of international experience on the relationship between negative institutional distance and investment success or failure is less obvious than that in “non-sensitive” industries. In addition, the sample data of foreign investment by China’s multinational corporation in the “Belt and Road” countries are examined, which is consistent with conclusions. The research results also show that the host country’s dependence on trade, infrastructure and strategic resources are all important factors affecting the success or failure of foreign direct investment of Chinese multinational enterprises. According to the above conclusions, some suggestions and countermeasures are proposed in this paper.
Highlights
Under the guidance of the “going out” strategy and the advocacy of the “One Belt, One Road” cooperative development concept, foreign direct investment by Chinese enterprise has developed rapidly
Corruption control are all significantly negative. This shows that the greater the institutional distance between the six sub-dimensions, the larger the failure foreign direct investment of Chinese enterprises, which is consistent with the conclusions drawn from the comprehensive indicators with six dimensions in the basic regression
On the basis of theoretical assumptions, it empirically tests the influence of institutional distance and international experience on the success or failure of foreign direct investment by Chinese enterprises
Summary
Under the guidance of the “going out” strategy and the advocacy of the “One Belt, One Road” cooperative development concept, foreign direct investment by Chinese enterprise has developed rapidly. CNOOC’s acquisition of American oil company Unocal failed due to a strong political rebound, holding increase of Australia Rio’s operations by Chinalco failed due to political system resistance, and a large number of Chinese companies stopped working due to Libya’s riots Even those deals that have been successfully completed have a tortuous experience behind themselves. This paper studies the impact of the host country and China’s institutional distance on the success or failure of foreign direct investment by Chinese multinational corporations. This helps us to understand more deeply the problems that our enterprises may face in transnational operation, and helps our multinational enterprises to go out better and faster. The research has regional characteristics, with conclusions that have certain guiding significance for Chinese enterprises to make foreign investment in the countries along the “Belt and Road” in the future
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