Abstract
However, among global foreign investment, the failure rate of Chinese enterprises’ foreign direct investment has remained high. By analyzing the tracking data of China’s large-scale foreign investment in 2005-2016, this paper studies the relationship between institutional distance, bilateral political relations and the success or failure of Chinese enterprises’ foreign direct investment. The results show that institutional distance and bilateral political relations have a significant impact on the success or failure of foreign direct investment, and bilateral political relations have a negative regulatory effect on the relationship between institutional distance and the success or failure of foreign investment. The nature of corporate property rights will also play an important role in the regulation of bilateral political relations.
Highlights
After the outbreak of the financial crisis in 2008, the global economy has been greatly affected, and overseas investment by Chinese companies has been in full swing
By analyzing the tracking data of China’s large-scale foreign investment in 2005-2016, this paper studies the relationship between institutional distance, bilateral political relations and the success or failure of Chinese enterprises’ foreign direct investment
The results show that institutional distance and bilateral political relations have a significant impact on the success or failure of foreign direct investment, and bilateral political relations have a negative regulatory effect on the relationship between institutional distance and the success or failure of foreign investment
Summary
After the outbreak of the financial crisis in 2008, the global economy has been greatly affected, and overseas investment by Chinese companies has been in full swing. Throughout the case of overseas investment failure of Chinese enterprises, the causes of transaction failure are complex and diverse, affected by economic factors such as market and resources, and by non-economic factors such as the political risk and institutional environment of the host country. Chinese enterprises face more risks and uncertainties in the process of international investment This shows that political and institutional risks have become an important factor in restricting Chinese companies’ foreign investment. Yang Lianxing and others studied the impact of bilateral political relations and foreign investment and the success or failure of investment. By maintaining political relations with the host country, the Chinese government can improve the efficiency of investment, which is of great significance to promote the development of international trade of Chinese enterprises
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