Foreign-invested Enterprises In China Research Articles

Does the judicial independence affect foreign investment? Evidence from China

This study empirically investigates the role of judicial independence in facilitating the entry of foreign-invested enterprises in China. Utilizing the judicial independence reform since 2014 in China as a quasi-experiment, we conduct a difference-in-difference (DID) strategy to estimate the effects of judicial independence on the influx of foreign investment and the underlying mechanisms. The findings suggest that bolstering judicial independence can significantly promote the entry of foreign investment. The yearly numbers of newly-registered foreign-invested enterprises increase by around 17.8 % in pilot cities. Judicial independence enhances the quality of adjudication that amplifying the protection of corporate property rights, consequently attracting foreign investment. Further analysis shows that bolstering judicial independence also causes structural change of foreign investment, including an increase in the proportion of small and medium-sized, sole proprietorship, high-tech enterprises, and enterprises from developed countries.

Trade-off between carbon emissions and employment embodied in global value chains: A study based on enterprise heterogeneity in China

Comprehensively measuring embodied carbon emissions and employment generation from global value chain (GVC) production activities is essential for GVC upgrades and sustainable development. Previous studies have ignored embodied carbon emissions and employment generation from GVC production activities involving cross-border direct investment, which may underestimate the impact of GVC participation. Using an intercountry input-output model distinguishing domestic and foreign-invested enterprises, this study measured embodied carbon emissions and employment generation in China's GVC production activities from 2005 to 2018 and explored their trade-offs based on the aggregate-embodied carbon employment intensity (ACEI). The major findings were as follows. (1) Trade-related GVC contributes more to embodied carbon emissions than to that of embodied employment. However, investment-related GVC had the opposite effect. Mixed trade and investment-related GVC contribute approximately equally to carbon emissions and employment. (2) China experienced increasing environmental losses relative to employment generation from GVC participation increased between 2005 and 2018. The environmental costs of creating employment units through investment-related GVC activities were lower than those for the other two GVC routes. (3) High R&D-intensive manufacturing industries suffered a notable decline in ACEI. This finding suggests that a double dividend for the environment and employment is more likely to be achieved in high-tech manufacturing industries. (4) The ACEI of foreign-invested enterprises in China was lower than that of domestic enterprises, particularly in the production-sharing activities between foreign-invested enterprises, which exhibited a better trade-off between socioeconomic benefits and environmental damages. These findings provide useful insights into the impact assessment of GVCs, which aid in achieving sustainable development in China and other emerging economies.

The Impact of Green Institutional Pressure from Local Governments on Corporate Innovation: An Empirical Evidence from Foreign-Invested Enterprises in China

The natural environment of the human world has been deteriorating over the past few decades, and policies to protect the environment are receiving increasing attention from governments worldwide. The question of how green institutional pressures from local governments impact corporate behaviors, especially innovation behaviors, is a critical issue. However, the link between local governments’ institutional pressures and corporate innovative behaviors remains a matter of some dispute. This paper compiles data from foreign-invested enterprises in China, using the frequency of green development terms in the Chinese local governments’ annual reports as a key variable, and discusses the influence of local governments’ green institutional pressure on corporate innovation. The conclusions of this paper demonstrate that local governments’ institutional pressure has a promoting effect on corporate innovation, while the home country’s level of green knowledge reservoir has a negative moderating effect on this influence. Moreover, this conclusion exhibits heterogeneity across corporate nature, industry attributes, location characteristics, export experience and home country type.

Spillover-feedback effects of employment, energy, economy and environment (4E) between domestic-owned and foreign-invested enterprises: Taking China as an example

Multinational enterprises (MNEs) have a significant impact on a country's employment, energy, economy and environment (4Es) through the interactive linkages between domestic-owned enterprises (DOEs) and foreign-invested enterprises (FIEs). However, the role of the interactive linkages between DOEs and FIEs in achieving the SDGs of the host country is still a blank. In this study we analyze the impact of the interactive linkages between DOEs and FIEs on China's employment, energy, economy and environment for the first time by constructing a model of spillover-feedback effects between enterprises. We find that FIEs mainly influence the sustainable practice of FIEs in the host country through the interactive linkages between DOEs and FIEs, which is mainly reflected in that the spillover effect of China's FIEs' 4E footprints is greater than the multiplier effect. If the interactive linkages between DOEs and FIEs is not taken into account, the role of FIEs in China's social, economic and environmental fields will be underestimated. Given the trade-offs between the SDGs, we introduce corresponding socio-economic-environmental efficiency indicators. The results show that the comprehensive benefits of FIEs on China's employment, energy and environment through the interactive linkages between DOEs and FIEs tend to decrease and then increase, and makes China's economy more "decarbonized". This study provides empirical evidence for MNEs to achieve the SDGs of host country through the interactive linkages between DOEs and FIEs, and adds new insights to the debate on sustainable development policies.

Distances Matter: Parent’s CSR Reputation and CSP of Multinational Enterprises’ Subsidiaries

Prior studies found that foreign subsidiaries of multinational enterprises (MNEs) suffer from liability of foreignness (LOF). According to stakeholder theory, foreign subsidiaries may be able to improve their legitimacy of business practices and overcome LOF by demonstrating social commitments to host-country constituents through corporate social responsibility (CSR). This study doesn’t only investigate whether the distances between the MNE home countries and China (host country) affect multinational enterprises (MNEs) foreign subsidiaries’ corporate social performance (CSP), but also examines how sub-national institutions affect the subsidiaries engaging in CSR in China. The study further tests the moderating role of parent’s CSR reputation. Using the data from 2009 to 2015 in the blue books of corporate social responsibility issued by Research Center for Corporate Social Responsibility Chinese Academy of Social Sciences (CASSCSR), the study adopts the top 100 foreign-invested enterprises in China as our sample. The CASSCSR collected the CSR information via their CSR reports, financial reports and official websites; they did an all-around research and valuation on their current CSR information disclosure. The results show the effect of distances on subsidiaries’ CSP in China, and highlight the importance of parent’s CSR reputation as a mechanism that may induce foreign subsidiaries to engage in CSR in China.

중국 종업원의 정서적 조직몰입에 관한 이해: 중국의 국내기업 및 외국인투자기업의 분석을 중심으로

본 연구는 중국의 특성을 고려하여, 중국 종업원들의 정서적 조직몰입에 관한 이해를 제공하는데에 목적을 두고 있다. 먼저, 본 연구는 중국 종업원의 정치적 정체성과 도시 거주증이 정서적 조직몰입에 미치는 영향을 분석하였다. 또한, 본 연구는 정치적 정체성과 정서적 조직몰입 간의 관계에서 중국 국내기업의 조절효과를 분석하여 정치적 정체성이 정서적 조직몰입에 미치는 영향이 중국 국내기업과 외국인투자기업 간 차이가 있는지를 살펴보았다. 가설검증을 위해, 본 연구는 중국의 국내기업과 외국인투자기업에서 일하고 있는 종업원 429명을 대상으로 설문조사를 실시하였다. 다층분석결과, 공산당에 소속된 종업원의 정서적 조직몰입이 공산당원이 아닌 종업원에 비해 낮은 것으로 나타났다. 또한, 도시 비거주자는 도시 거주자보다 정서적 조직몰입이 높은 결과가 밝혀졌다. 그리고 정치적 정체성과 정서적 조직몰입 간의 관계에서 중국 국내기업의 긍정적 조절효과가 발견되었는데, 이는 중국 국내기업에서 근무하고 있는 공산당원인 종업원이 외국인투자기업에 일하고 있는 공산당원인 종업원보다 정서적 조직몰입 수준이 높다는 것이다. 끝으로 본 연구는 연구결과가 제시한 학문적, 실무적 시사점, 향후 연구주제와 본 연구의 한계점에 대해 논의하였다.

An Exploration of Organizational Assimilation Among State-Owned, Private-Owned, and Foreign-Invested Enterprises in China

This study explores organizational assimilation in Chinese organizations. To reflect the Chinese context more accurately, the present study compared employees working in three different kinds of organizations: state-owned enterprises (SOEs), private-owned enterprises (POEs), and foreign-invested enterprises (FIEs). Data collected from 220 full-time employees were analyzed using multiple regression analysis. Regression analyses demonstrated that employees’ level of organizational assimilation was significantly influenced by organizational type: Employees in SOEs reported the highest level and employees in FIEs reported the lowest level of organizational assimilation.

Business Relationship Strategy for Foreign-Invested Enterprises in China: The Moderating Role of Competitive Structure and Entry Type

Although the role of Guanxi in China as a form of relationship marketing (RM) has received increasing attention in recent years, few empirical studies have indicated that Guanxi has more impact on performance than RM in the Chinese market. Foreign-invested enterprises (FIEs) may have some difficulty in fully practicing RM in China without considering the influence of Guanxi. In this regard, this study is guided by the following research question: “In China, which factors influence the differences in the impacts created by RM and Guanxi?” In this study, we first provide an overview of previous research on Guanxi, focusing on the fundamental differences between Guanxi and RM. We then provide an empirical analysis of the differential effects of Guanxi and RM on firm performance by investigating 297 FIEs in China. The results suggest that Guanxi and RM are not trade-off options in today’s Chinese market. Guanxi and RM have synergetic effects on firm performance, that is, they have differential effects based on the mode of market entry and the competitive structure. Guanxi is more likely to influence firm performance for collaboration-based entry firms rather than entry without collaboration firms, whereas RM is more likely to influence firm performance when FIEs’ main competitors are foreign firms than when they are local firms.

Institutional Compatibility and the Diffusion of “Best Practices”: Human Resource Management in Foreign-Invested Enterprises in China

We advance the literature on global diffusion, currently dominated by the world polity theory, by examining how the local institutional environment shapes the diffusion of global best practices. We argue that global best practices that are more compatible with the local institutional environment are more likely to be adopted by local actors, and that they also exert a greater positive impact on the adopters. In contrast to existing research that typically focuses on a single policy or structure, we collected original data on the diffusion of twenty-five human resource management best practices in foreign-invested enterprises in China. Our analysis shows considerable variation in the adoption level across practices, much of which is attributable to their different levels of compatibility with China's local institutional environment. Furthermore, we find that adopting more compatible practices indeed makes greater contribution to organizational performance.

Cultural friction in leadership beliefs and foreign-invested enterprise survival

Cultural friction posits that cultural differences may be either synergistic or disruptive, but does not specify when or how synergies or disruptions emerge. We theorize that synergies will emerge in foreign-invested enterprises (FIEs) when cultural differences in leadership beliefs are less central to the host nation’s cultural identity; while disruption will occur when differences are in more culturally central leadership beliefs. Analyzing survival data from 274 FIEs in China, we found support for these hypotheses with five of the six GLOBE leadership dimensions. As predicted, differences in the Participative and Team-Oriented dimensions were associated with higher firm death, while differences in the Charismatic, Autonomous and Self-Protective dimensions were associated with firm survival. Our results indicate that while there are areas where differences may indeed need to be accepted or minimized, there are other areas where differences can be beneficial. This requires that managers identify more central aspects of local culture to determine whether to minimize differences or to leverage their synergistic potential.

Negative List in the SHPFTZ and Its Implications for China’s Future FDI Legal System

The Negative List Approach in the Shanghai Pilot Free Trade Zone (SHPFTZ) is an incremental step towards equal treatment for foreign-invested enterprises in China. Nonetheless, the Chinese government’s reluctance and prudence in further opening-up, especially in domestic liberalization, is an encumbrance to the advancement of its large economy. The Negative List Approach in the SHPFTZ has many fundamental flaws, including low-level authority, uncertainty, limited effects, and incomplete reform. However, the Negative List Approach in the SHPFTZ is at least a model for other new FTZs in China and a reference for China’s future new FDI regulatory framework.

The Influence of New Enterprise Tax Reform on Foreign Invested Enterprises in China—Based on Computable General Equilibrium (CGE) Analysis

The law on new enterprises income tax was executed on January 1, 2008. Income tax rate for both domestic and foreign enterprises is 25% in China. This paper establishes a Computable General Equilibrium model to investigate the influence of the new company unified tax rate on foreign enterprises. This paper uses the 2007 national statistical data to calibrate parameters and obtains two equilibriums: benchmark equilibrium and 25% unified tax rate equilibrium. In addition, the influence on foreign enterprises is investigated through comparing the two equilibriums. This paper researches the relationship between unified tax rate and foreign direct investments. Finally, this paper does the sensitivity analysis of the foreign direct investments for the actual foreign enterprise income tax rate and discount coefficients of state-owned enterprises’ return on capital.

Foreign-Invested Enterprises in China:

Abstract. The objective of this study was to illustrate the development and sustainability for foreign-invested enterprises in China.Banks would react to banking regulation of Basel III. The traditional loans are very costly in capital. Banks restrict lending and treat lending as a marketing tool. Foreign-invested enterprises will be difficult to get the traditional loans. The development of peer to peer (P2P) leading perform will be targeted for the foreign-invested enterprises’ new financing channel in China and the world. Also, brand name is the key factor for enterprise survival. It represents the commercial integrity. Foreign-invested enterprises can use the concept of creating shared value (CSV) as reference to sustain their business in China. Keywords. Foreign-InvestedEnterprises, Peer to Peer (P2P), Creating Shared Value (CSV), China. JEL. E22, M00, O10.

On the Improvement of China’s Legal System of Foreign Direct Investment

China has not enacted unified foreign direct investment code, and the legal system of foreign direct investment is composed of separate laws and numerous regulations and rules at both national and local level. The establishment of all foreign investment enterprises in China is subject to examination and approval of relevant authorities, only after which enterprises can be registered. The operation duration of equity joint ventures, contractual joint ventures and solely foreign-founded enterprises shall comply with relevant provisions of Chinese laws. The operation duration and disillusion of foreign-invested stock joint limited companies are subject to Chinese Company Law. The 2-track legislation model, under which foreign investment enterprises and domestic enterprises are governed by different laws and regulations, caused conflicts among different laws and difficulties in application of laws. To overcome the defaults China must enact unified law on foreign direct investment.

Loan accessibility for foreign-invested enterprises in China

The paper examines loan accessibility for foreign-invested enterprises (FIEs) in the Chinese credit market. We find that FIEs receive more favourable terms when borrowing from banks, even compared with state-owned enterprises (SOEs). First, FIEs have more lines of credit, and their unused loan ratios are higher. Second, FIEs are not different from SOEs in aspects of collateral requirement, collateral ratio and the need for bribery. Third, FIEs have obtained bank loans more easily since the third bank reform launched in 2003. The results imply that developing economies should pay more attention to the fund crowding-out effect of FIEs, which may exacerbate the financial constraints on domestic firms.

The energy efficiency advantage of foreign-invested enterprises in China and the role of structural differences

In this paper, we use a unique input–output table that distinguishes trade mode and firm ownership to discuss the relative advantage of foreign-invested enterprises (FIEs) in Mainland China. It is found that FIEs outperform Chinese owned enterprises (COEs) in terms of total energy intensity by 16.97%, 14.97% and 42.89%, respectively, for the processing, non-processing and overall production in the industrial sector. Further decompositions show that structural differences across industries (and trade mode) contribute positively and account for 65.33%, 26.28% and 81.93% of the relative advantage of FIEs for processing, non-processing and overall production. Failure to capture heterogeneity across trade mode may lead to distortion of the picture of how final demand structure differences influence the energy efficiency advantage of FIEs over COEs in China.

A Practical Study on the Legal Principles for Resolving the Share Disputes of Foreign Invested Enterprises in China - Focusing on Confirming the Rights of Share Transfer and Anonymous Investors -

A Practical Study on the Legal Principles for Resolving the Share Disputes of Foreign Invested Enterprises in China - Focusing on Confirming the Rights of Share Transfer and Anonymous Investors -

CEO background and the adoption of Western-style human resource practices in China

This study develops and tests an institutional explanation of how chief executive officer (CEO) characteristics affect the adoption of Western-style human resource (HR) practices in China's transitional economy. It was predicted that: (1) CEO exposure to HR ideology would positively relate to firm adoption of Western-style HR practices, and (2) CEO embeddedness in the Chinese institutional environment would negatively relate to Western-style HR adoption. Data from 309 foreign-invested enterprises in China supported these predictions. Further analysis also revealed that the pattern of relationships between CEO characteristics and Western-style HR adoption differed with respect to the various functional areas within HR.

Domestic Firm Innovation and Networking with Foreign Firms in China's ICT Industry

This study systematically analyzes the impacts of supplier–client and technological linkages with foreign firms on domestic firm technological innovation, based on a unique dataset that was collected through a survey of over 600 firms in China's information and communication technology industry. The results revealed that Chinese firms were engaged in extensive supplier–client relationships with foreign firms, although their technological collaborations with foreign firms were very limited. It was found that firm innovation benefited significantly from technological relationships with foreign firms. However, the results also suggest that, although export/import did contribute to domestic firm innovation, supplier–client relationships with foreign-invested enterprises in China did not show positive effects on domestic firm innovation. The analyses further suggest that such market transactions between domestic and foreign firms helped building technological linkages between domestic firms and foreign firms. These results clearly demonstrate the value of networking in enhancing firm innovation in developing countries.

Influences and Countermeasures of the Policies Expanding Domestic Demand for Foreign-investment Enterprises

Since 2007, the global financial crisis induced by the subprime crisis of US has been more and more serious,with bigger and bigger influencing range. The global economy begun to slide, the financial market fluctuated,many enterprises went bankrupt, the unemployment rate further increased, and the consumption descended,which all make the development of foreign-investment enterprises in China be challenged seriously. In thechange of economic situation of the world, to continually develop, foreign-investment enterprises must considerthe situation, find a foothold to expand the domestic market, and further utilize the policy advantage ofexpanding the domestic demand to promote the healthy development of the economic enterprises.