The Liability of Foreignness of EU Environmental Protection Companies in China: Manifestations and Mitigating Strategies

Abstract

Abstract Purpose The objective of this chapter is to explore the experience of EU companies in the environmental protection sector in China focusing on their difficulties and the mitigating strategies mobilized. Methodology/approach We adopt a qualitative, case study approach, using interview data to explore the liability of foreignness (LOF) experienced by the companies studied and the strategies adopted to overcome LOF. Findings We found examples of all categories of LOF identified by Eden and Miller (2004), among our case study companies, but the most problematic and persistent were discrimination hazards. Companies adopted various strategies to cope with LOF, including maximizing the use of local employees, developing relationships with local and national government actors, and establishing partnerships with local companies. None had chosen a combative legalistic approach to the unfair treatment they had suffered. Research limitations The relatively small number of cases (six) limits the generalizability of our findings. However, we are convinced that the size of our case companies and their long experience in China mean our findings are well grounded, although more research is needed. Practical implications The experience of our case study companies can help to inform the strategy of companies interested in entering and developing the Chinese market. Originality/value Very few studies have explored LOF through a case study-based qualitative approach. This research therefore helps to supplement findings from more large-scale quantitative analyses. In addition, there is little research on the LOF of foreign companies in China. Given the growing importance of the market, we believe the question merits further analysis.