Chinese Multinationals Research Articles

Digital Transformation and Inter-Regional Dynamics: Accelerating Chinese Multinationals' Internationalization in the De-globalization Era

Digital Transformation and Inter-Regional Dynamics: Accelerating Chinese Multinationals' Internationalization in the De-globalization Era

Chinese Multinationals and Europe’s Geoeconomic Turn: The De‐Globalization of the Chinese ICT and Automotive Industry?

Amid increasing geopolitical tensions between Western powers and China over the alleged state-capitalist nature of Chinese corporate internationalization, European governments have introduced a set of political measures tightening their trade and investment regimes on grounds of national security and economic competitiveness. This article analyzes how this “geoeconomic turn” in Europe affected the internationalization of (state-backed) Chinese firms into Europe and hence the establishment of Sino-European corporate relations. With a focus on the Chinese ICT and automotive industries, we zoom in on corporate internationalization by distinguishing two modes: (a) outward foreign direct investments (greenfield investments and mergers and acquisitions) and (b) the formation of collaborative ties (strategic alliances and joint ventures) with European companies—a hitherto underexplored form of Sino-European corporate relations. Our analysis is predicated on a comprehensive dataset consolidating information on both modes of internationalization for the period 2000–2023. We show that, in relation to investment numbers, Chinese companies continue to expand into Europe, even if values are decreasing. We also find that the formation of collaborative ties (strategic alliances and joint ventures) has not halted but increased in the wake of Europe’s geoeconomic turn, indicating a further intensification of Sino-European corporate relations, though under the radar of tightening investment policies and mechanisms. When unpacking the variegated impact of the geoeconomic turn on Chinese companies’ internationalization strategies in Europe, our study also finds, however, that its ramifications vary substantively—not only per sector but also among companies exposed to varying degrees of party-state permeation. Applying a novel fine-grained measure to party-state permeation, the article shows that the geoeconomic turn seems to have affected predominantly those leading Chinese firms with a high party-state exposure.

Diplomatic Relations and Investment Location of Chinese Multinationals: An International Political Economy Perspective

AbstractPast research has suggested that diplomacy can play a significant role as a mechanism to pave the way for multinational enterprises (MNEs) in foreign countries. Drawing on the international political economy perspective, this article analyzes the influence of the diplomatic activities of the Chinese government on the location of Chinese MNEs. It develops several hypotheses regarding the influence of three essential tools in the Chinese government's current diplomatic agenda: high‐level visits by the Chinese President, the establishment of Confucius Institutes, and the Belt and Road Initiative (BRI). The empirical analysis is based on a sample of 972 country–year observations from 2013 to 2021. The results show that high‐level government visits and Confucius Institutes positively impacted the location of China's outward foreign direct investments, with the effect being lower in BRI countries. The impact of Confucius Institutes was higher for state‐owned enterprises.

Chinese Multinationals Gaining Global Dominance

Chinese firms have become key players in the global economy. Their rise is a defining feature since the turn of the century. In this paper, we analyze the ascent of Chinese firms in global business, the factors behind their emergence and how they have disrupted the global competitive landscape. Through the empirical study of large samples of firms and the help of databases like Capital IQ, FdI Markets and SDC Platinum, the paper examines the revenue growth and global expansion of Chinese firms– highlighting, among others, trends in geographical and sectoral distribution and modes of entry in foreign markets. The paper pays also particular attention to the rise of Chinese firms as global innovators and includes several cases studies in key industries. The paper concludes that while Chinese firms’ global expansion benefited from a favorable global environment, the current trade wars and geopolitical tensions, may be more challenging.

The Growth of Chinese Multinationals

The growth of Chinese multinationals has become a fascinating component within the larger literature on the growth of firms in and out of emerging economies. Leveraging the latest and most-comprehensive data, Casanova and Miroux’s (2024) research enables us to evaluate the validity of predictions made by Peng and Heath (1996), Rugman and Li (2007), and Peng (2012). Overall, the growth of Chinese multinationals reported by Casanova and Miroux has not supported earlier predictions, but has increasingly supported more recent predictions. Casanova and Miroux’s research therefore has made significant contributions by providing much-needed empirical checks for the claims made by earlier scholars, thus revealing both the strengths and weaknesses of this rapidly evolving literature.

Why do Chinese multinationals in South Africa get benefits from digital business strategy?

Background: Chinese multinational enterprises (MNEs) are obsessed with implementing digital business strategy in global competition, but there is limited knowledge about how and when the MNEs can achieve performance.Aim: This study aims to clarify the influence of digital business strategy on MNEs’ performance in South Africa, and whether this impact is mediated by exploratory and exploitative learning and moderated by organisational memory level and dispersion.Setting: Senior executives from the MNEs participated in the year-long survey. Before the survey, the participants were communicated and agreed, and the survey was completed by email.Method: Two-stage data from 314 MNEs in South Africa were obtained. Hierarchical regression analysis and Hayes Process Macros were used.Results: The results show that digital business strategy positively influenced performance, and the relationship was mediated by exploratory and exploitative learning. Organisational memory level and dispersion had an inverted U-shaped moderating effect on the relationship between digital business strategy and exploratory and exploitative learning.Conclusion: This study provides the first insight into the relationship between digital business strategy and MNEs’ performance in South Africa. It reveals the mediating mechanism and boundary conditions of this relationship, making an important contribution to the literature concerning digital business strategy.Contribution: This study encourages MNEs in South Africa to implement digital business strategies according to local conditions. What’s more, exploratory and exploitative learning is a strategic process that cannot be ignored, and moderate organisational memory can help these MNEs benefit from digital business strategy better.

Strategic asset-seeking acquisitions and marketing capabilities of Chinese multinationals: An ability, motivation, and opportunity perspective

This study explores the drivers of marketing capabilities of Chinese multinationals in the context of strategic asset-seeking acquisitions, which remain largely unexplored. Drawing on the integrative framework of the ability-motivation-opportunity (AMO) framework and the knowledge-based view, we argue that the decline in cost leadership capabilities before the acquisitions increases the motivation of Chinese multinationals to leverage the acquired strategic assets to enhance their marketing capabilities. Stronger managerial ability and higher regional international openness represent the ability component and favorable environmental conditions required to realize improvements in marketing capabilities. In contrast, industry dynamism, as an opportunity element, can constrain the achievement of this goal. We conduct an empirical analysis using the Heckman two-stage model, based on a sample of Chinese listed firms spanning the period from 2009 to 2021, and find support for our arguments in the results. Our findings contribute to the marketing literature by identifying a potential avenue for enhancing marketing capabilities and to the international business literature by investigating a new approach for emerging economy multinational enterprises (EMNEs) utilizing international M&As as a springboard to build competitive advantages of EMNEs in addition to improving innovation capabilities.

Did tax treaties restrain the profit shifting of Chinese multinationals?

Did tax treaties restrain the profit shifting of Chinese multinationals?

The interaction between domestic and outward foreign direct investment in China: The influence of region-specific context.

Since the Chinese government launched the Belt and Road Initiative, state-owned enterprises and private conglomerates have increased overseas investment. The massive outward foreign direct investment (OFDI) profoundly affects China's regional development to varying degrees. Existing studies have mainly investigated the effect of foreign direct investment inflow on domestic investment (DI), but only a few studies have examined the impact of OFDI on DI. Though most researchers have indicated that OFDI activities can promote (or inhibit) DI in a particular country, they have overlooked how OFDI's geographical distribution and motivation across the Chinese macro-regions have influenced DI. To fill these gaps, this paper examines the impact of such OFDI on DI in China and its macro-regions, using a province-level dataset from 2005 to 2021. It employs panel regression and rigorously tests the data using the generalised method of moments to address endogeneity issues. We also investigate the investment motivations of the top 100 Chinese multinationals with significant FDI outflows from 2015 to 2018. We find that OFDI has positively and markedly influenced DI in eastern coastal and central inland regions but not in western China. Though OFDI has positively affected DI in China, it may not hold in a regional context. Such OFDI seeks to enhance the efficiency of existing investment, expand domestic markets, and look for strategic assets. Our findings indicate that central and provincial governments could develop OFDI policies to cater to significant regional variations. Local governments should also consider the various OFDI motivations of Chinese multinationals and provide adequate support for developing and implementing local investment policies that encourage domestic firms to invest abroad.

Boosting business confidence for Chinese multinationals in the Belt and Road Initiative

Boosting business confidence for Chinese multinationals in the Belt and Road Initiative

Liability of political embeddedness in Chinese multinationals: Implications for headquarters’ roles and reverse knowledge transfer

It is well known that Chinese multinationals’ international expansion is often supported by the home-country government. This study argues that the political embeddedness of Chinese multinationals’ headquarters may impair their managerial intentions and abilities to carry out their entrepreneurial and administrative roles and, indirectly, their capacity to achieve reverse knowledge transfers from their foreign subsidiaries. Based on a study of 177 subsidiaries of 99 Chinese multinationals, we find no support for the argument that political embeddedness affects headquarters’ centralization of subsidiary decisions, although such centralization is negatively associated with reverse knowledge transfer. Additionally, our findings show that home-country political embeddedness is negatively associated with headquarters’ entrepreneurial role vis-à-vis individual subsidiaries. This hampers subsidiaries’ reverse knowledge transfers. The results contribute to understanding the value of political embeddedness and headquarters’ roles in the context of Chinese multinationals. They also provide insights into the strategic asset-seeking internationalization of Chinese multinationals. By developing and operationalizing the multidimensional concept of political embeddedness, this study further contributes to the research on firm-government relations.

Chinese Multinationals’ Dynamic Integrations in the Developed Market: From a Resource Dependence Perspective

Integrating the developed-market resources after acquisitions is a crucial tool for Chinese multinational enterprises (CMNEs) to accelerate industrial high-quality development. However, existing theories have scarce thorough explanations of the dynamic mechanism of CMNEs’ post-merger integrating resources. Our research aims at disclosing CMNEs’ post-merger integration (PMI) long-term dynamics under resource relatedness changes. We applied a multiple-case study with four typical CMNEs’ German-market PMI cases and proposed a theoretical framework based on a coding analysis of 38 interviews. Our findings highlight that: CMNEs change initial gentle integrations (partnering/preservation) to balance dependence when pre-merger resources complementary decreases with similarity increasing, or to extreme dependence when pre-merger resources similarity continually increases to extremely high. Pre-merger resource relatedness basics and later changes and CMNEs’ dynamic capability (threat and development potentials’ perception capabilities and utilization capability) are crucial factors in promoting CMNEs’ PMI changes. Our originality lies in that we consider the interactions resource relatedness changes and CMNEs’ PMI dynamics, strongly replenishing the deficiency of current PMI dynamic studies that lack considerations of resource relatedness changing; also, we simultaneously consider the two facets of dependence asymmetry and joint dependence such that broadened the application of resource dependence theory (RDT) in PMI studies. Our study offers managerial insights into CMNEs’ development leapfrog through acquisitions in developed markets that CMNEs should focus on the vital role of inter-firm resource relatedness changing. Initial gentle integration can be deepened when original resource backgrounds become more similar but should be cautious of the effect of power imbalance and selfish actions.

Motive Complexity of Chinese Multinationals in the African Context

Motive Complexity of Chinese Multinationals in the African Context

The carbon footprint of Chinese multinationals’ foreign affiliates

As China’s outwards foreign direct investment (OFDI) has grown dramatically, the environmental impact of the production activities of Chinese multinational enterprises (MNEs) has received substantial attention. Using a multiregional input-output model reflecting firm heterogeneity, this study measures the carbon footprint (CF) and value-added (VA) of Chinese MNEs’ foreign affiliates to quantify the trade-off between economic benefits and environmental damage. The results show that Chinese MNEs’ affiliates’ CF is not large but grows quickly, mainly driven by investment and scale effects. The CF of foreign affiliates is primarily distributed in resource-intensive countries. The economic-environmental effect of Chinese MNEs’ foreign affiliates is heterogeneous across countries and sectors. The best performance is found in the manufacturing sectors of most developing countries, with the worst performance in the service sectors of developed countries. Chinese MNEs’ affiliates can transfer clean technology from developed host countries to China through reverse technology spillovers.

Acquiring innovation – Do Chinese acquisitions in developed countries spur innovation at home?

Chinese multinationals’ acquisitions of Western firms have increased dramatically in recent years. However, relatively little is known about the effects of these acquisitions on the acquirers’ innovation. Using Chinese acquisitions in Western countries during 2000–2017 and applying matching and difference in difference methods, we find that Chinese acquirers innovate more after acquisitions. Their patenting activity significantly picks up after the acquisitions of high-tech firms in developed countries. The results give support to the widespread view that Chinese companies are acquiring foreign technologies through acquisitions; they also show that Chinese companies successfully transfer and incorporate the newly acquired technologies at home, especially if the parent company was an innovator before the acquisition. The results also show that the degree of product complexity of the target firms matters and increases the innovation activity of Chinese acquirers.

FORMS AND INSTRUMENTS OF INTERNALIZATION STRATEGIES FOR EMERGING MARKET MULTINATIONALS: THE CASE OF CHINA

The international presence of multinational companies from emerging countries presents new issues and challenges existing theories. The internationalization of multinationals from emerging countries (ECMNC) has undoubtedly become a real challenge for the existing knowledge of multinational companies. However, studies of ECMNC are be limited to reasoning on the difference by compared to multinationals in developed countries (DCMNC), but rather seek opportunities to develop a more comprehensive theory of internationalization. Among these ECMNCs, those of China seem to be the most active at present in internationalization. Linking the flow of FDI and international management help to understand how Chinese multinationals go international without possessing the necessary resources or at least, conventionally considered necessary with regard to existing theories. The strategic choice plays a vital role in successful development of the internalization of Chinese companies.

ESG, Cultural Distance and Corporate Profitability: Evidence from Chinese Multinationals

In recent years, the demand for social responsibility arising from sustainable development has led to the gradual formation of a global consensus on the concept of environmental, social and governance (ESG), which has a wide impact on corporate operations. Based on legitimacy theory, this study examines the impact of ESG on corporate profitability. In addition, it explores the effectiveness of cultural distance as a moderator in the relationship between ESG and corporate profitability. Using fixed effects and moderated effects models, this study analyses panel data of Chinese manufacturing multinationals from 2014 to 2021. The results show that ESG significantly and positively affects corporate profitability and that the impact of ESG on corporate profitability is significantly and positively moderated by cultural distance. The research results are expected to provide meaningful insights into the importance of ESG and the factors to be considered by firms in their cross-border investment decision making.

Yield and Volatility of BYD in Uncertain Market: Evidence from Fed’s Monetary Policy

On March 16, 2022, the U.S. Federal Reserve Board announced that It would be the first rate increase since December 2018 and the target range for the rate of federal funds should be increased by 25 basis points, to 0.25 and 0.5%. The Federal Reserve Board of the United States announced a rise in interest rates on June 15, 2022, increasing the fed funds rate firing range to 1.5% and 1.75%, which was the Fed's biggest single rate increase since 1994. Chinese multinationals would be affected by the Federal Reserve's rate increase through the mechanisms of interest rates and currency rates, which will significantly affect the economy of China in many areas, including the automobile industry. This paper selects the well-known Chinese automobile international company BYD and intercepts its stock data as well as the Federal Reserve interest rate and uses both VAR model and ARMA-GARCH model to analyze the data, to study how the yield of Chinese companies has been affected by the Federal Reserve interest rate hike, and to provide feasible suggestions for the investors, lawmakers, and other international enterprises.

Impacts of the Belt and Road Initiative on regional outward FDI from China based on evidence from 2000 to 2015

Abstract Firms from different provinces in China and their different reactions to the Belt and Road Initiative (BRI) are studied in this research. Initial results from 27.547 outward foreign direct investment (FDI) projects by Chinese firms between 2000 and 2015 regarding the home region profile, host country choice, and FDI motives of the investment firms before and in the early years of the launch of the BRI policy are investigated. The findings show that Chinese firms from eastern provinces that have accumulated a large quantity of inward FDI are more likely than firms from western provinces to switch their investments to BRI-involved countries and engage in a more diverse set of outward FDI motives. These findings help interpret the behavior of Chinese multinationals in the current (de)globalization era, namely using the BRI to circumvent FDI barriers imposed by advanced western economies.

Why Different Acquirers Generate Different Firm Value From Cross-Border M&As: Evidence From Chinese Multinationals

Multinationals from emerging markets have attracted worldwide attention with their prominent cross￾border mergers and acquisitions (M&As). However, little is known about why emerging-market acquirers experience positive value creation through foreign M&A activity while many advanced country acquirers suffer value destruction. This study draws on institutional theory, the springboard perspective, and the asset exploitation and exploration perspectives to examine the critical determinants of firm value creation for Chinese acquirers. Analysis of data from a sample of Chinese firms over the period 2002–2019 shows unique outward M&A advantages held by Chinese multinationals. These companies benefit from tangible and intangible assets acquired from outward M&As in advanced and institutionally divergent economies. The findings suggest Chinese firms that use M&As to capture strategic assets create higher firm value than firms that are driven by traditional FDI motives.