Foreign-invested Enterprises Research Articles

Tracing carbon emissions and intensity in relational global value chain activities

Existing studies on emission accounting in global value chains (GVCs) have not focused on the relational nature of GVC activities manifested as the interaction of intermediate goods between enterprises. This paper proposes a relational GVC emissions accounting framework based on an inter-country input-output (ICIO) model distinguishing between domestic-owned enterprises (DOEs) and foreign-invested enterprises (FIEs), which is classified as trade-based, investment-based and hybrid-based emissions. Using AMNE-ICIO tables from 2005 to 2016, this paper traces emissions and carbon intensity in relational GVC activities at the global, economic, and industry levels. We find the following: (1) Investment-based emissions accounted for about 94.15% of the increase in relational GVC emissions, of which more than half comes from the interactive activities between DOEs and FIEs. (2) For the United States, high-income economies, and high-tech manufacturing, investment-based emissions were higher than trade-based emissions, and the reverse was true for upper-middle and lower-middle income economies and China. (3) Although relational GVC carbon intensity was high, the trend of decline was significant. (4) Compared to trade activities, investment-based activities were less carbon intensity in China and upper-middle income economies due to the interaction of production between FIEs and DOEs. The findings add new insights into the coordination of global emissions reductions and the allocation of emissions responsibility.

Research on Human Resource Management Mode of Foreign-invested Enterprises under Diversified Employment Mode

In order to be invincible in the fierce market competition, enterprises must break the long-term and stable labor relations and adopt more flexible and flexible employment methods. With the diversification of employment methods, various employment methods appear constantly. In the process of modern enterprise system change and management innovation, diversified employment methods have been rapidly developed and widely used. In practice, no matter what point of view, the focus is on how to distinguish traditional employment from atypical employment. Most of the employees of FIE (Foreign-Invested Enterprises) are Chinese employees. In the past, many FIEs focused on the quality of products and the management of production, but did not pay enough attention to HRM(Human Resource Management). Taking diversified employment as the breakthrough point, this paper expounds the influencing factors of FIE HRM on the basis of summarizing the related concepts of diversified employment, and focuses on the construction of FIE HRM mode under diversified employment mode, with a view to providing reference for the development of enterprises.

Global value chain and export-embodied carbon emissions: New evidence from foreign-invested enterprises

Global value chain and export-embodied carbon emissions: New evidence from foreign-invested enterprises

A Study on the System of Residence Preferences for Foreign Investors in France

As a member of the European Union (EU), France's legal system for foreign investment includes the provisions of EU law and relevant domestic legislation. EU law is the prerequisite and framework for domestic legislation to promote foreign investment. Without violating the relevant treaties signed by the EU and EU law, France can formulate its own investment management policy according to its own national conditions. In recent years, in order to promote foreign investment, France has been seeking for innovation and change, and has carried out a series of reforms on the legal system for foreign investment on the basis of compliance with the investment-related laws and regulations at the EU level. The reform of France's legal system for promoting foreign investment mainly focuses on the issuance of visas for high-end talents and foreign students to attract foreign investors, as well as multi-type and multi-level tax incentives to attract foreign-invested enterprises. However, the effectiveness of the reform of France's legal system for promoting foreign investment has been affected to some extent by the complicated tax collection and management system and the tilted protection of employees in the labor law. Through a series of studies, this paper attempts to sort out the overall thinking and specific initiatives of France's reform of its legal system for promoting foreign investment, and objectively assess its impact and effectiveness, with a view to summarizing the lessons that can be drawn from China's efforts to improve its legal system for promoting foreign investment..

Globalization and regional consumption disparity in China: A disaggregated analysis

Developing countries are increasingly concerned about globalization's impact on regional disparities. This paper looks at the relationship between globalization and regional (rural-urban) differences in consumption in China. It does this by separating globalization into the trade of domestic-invested enterprises (DIEs) and the trade of foreign-invested enterprises (FIEs). Feasible generalized least square (FGLS) is used for empirical analysis based on panel diagnostics. For the robustness of the findings, we also employed panel-corrected standard errors (PCSE) model. The results show a reduction in China's regional (i.e., urban-rural) consumption disparity (RCD) caused by both DIEs and FIEs trade perspectives. The impact of FIEs trade on regional disparity is higher than that of DIEs trade, reflecting the fact that FIEs are predominantly labor-intensive. Our findings are robust and unaffected by the type of trade disaggregation or the econometric techniques used (i.e., FGLS and PCSE). However, the results for the three regions differ depending on the type of trade disaggregation. To achieve the goal of economic development and closing the regional consumption gap, the government must pay close attention to the distribution effects of FIEs and DIEs trade separately and implement a set of measures to reinforce its strengths and mitigate its weaknesses.

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.

Comparative study on the reasons for failure factors of sustaining operational improvement methodologies in manufacturing enterprises

PurposeThis study aims to present the results of a comparative study on the most key reasons for the failure of sustaining activities of operational improvement (OI) methodologies from the different types of manufacturing enterprises that located in Vietnam.Design/methodology/approachThis study presents survey results from 30 local manufacturing enterprises and 21 foreign direct investment (FDI) enterprises located in Vietnam – a developing country. The authors utilize a combination method to collect data, including online and direct survey. The targeted interviewees selected to answer the questionnaire are manufacturing managers and top managers working in productivity, quality, engineering and other departments in respective firms. The developed questionnaire is verified by five experts to ensure the validity and soundness.FindingsThe study uncover that 21 local enterprises (70%) have not issued standard forms for OI deployment and supervision, while 17 foreign enterprises (81%) have adopted a systematic management and clearly indicators for evaluation of OI outputs. In addition, the top three reasons for OI failure are differences between local and foreign enterprises. In term of OI methodologies, most of participated enterprises implemented Lean tools and principles while only 7.8% of the participated enterprises applied Six Sigma. Three vital findings are uncovered, including, first, 30% of local enterprises standardize and supervise forms of OI.Research limitations/implicationsThere is a limitation in sample size, with the number of participants of 51 enterprises. Among the participants, 27% of local enterprises are small and medium-sized enterprises (SMEs) while 60% of FDI enterprises from large-sized group. This was limited to making a generated conclusion in the comparison of failure factors between two types of enterprises. This partly affects the radical comparison of failure factors between local and FDI enterprises.Originality/valueTo the best of the authors' view, this is the first empirical study that compares the reasons for the failure for sustaining OI between local and foreign enterprises in a developing country. The result from this study will make contributions for further research in considering OI failure factors and then enhance effectiveness of OI methodologies in manufacturing companies.

The Impact of Ownership Structure on Technological Innovation and Energy Intensity: Evidence from China

Environmental pollution and climate warming have become global issues affecting human life, and the burning of fossil fuels is a major source of greenhouse gases. Ownership structure is related to energy efficiency and a change in ownership structure has a significant potential for energy saving. However, few papers have studied the impact of ownership structure on energy intensity from the perspective of technological innovation in the past. Based on panel data from 29 Chinese provinces from 2005 to 2020, we systematically investigate the impact of industrial department ownership structure on energy intensity and study the function of technological innovation in this relationship from the perspective of ownership heterogeneity by using empirical models including ordinary least squares, two-way fixed effects and random effects. The empirical results of this study reveal three findings. First, as the proportion of state-owned industrial enterprises increases by one unit, energy intensity increases by 0.803 units. However, as the proportion of Hong Kong, Macao and Taiwan-invested industrial enterprises, private industrial enterprises and foreign-invested industrial enterprises increases by one unit, energy intensity decreases by 0.847 units and 0.549 units. Second, R&D activities, FDI, capital intensity and exports can significantly reduce energy intensity, but imports can increase energy intensity. Third, the ownership structure can affect energy intensity by influencing R&D expenditure. The increase in the proportion of state-owned industrial enterprises can reduce R&D expenditure, but results in the opposite situation in private firms. Foreign-invested enterprises can reduce energy intensity by making more use of the parent company’s technology. Based on the above empirical results, we propose suggestions to reduce energy intensity, which can provide reference for government to formulate more effective energy policies and realize sustainable development.

IMPACT OF IMPORTED INTERMEDIATE GOODS ON ENERGY-ENVIRONMENTAL EFFICIENCY: FIRM-LEVEL EVIDENCE FROM CHINA

Improving energy-environmental efficiency (EEE) is an important way to achieve China’s carbon peak, carbon-neutral goals and green transformational development. The scale of imports of intermediate goods has been increasing rapidly with the deepening of China’s opening up to the outside world, which has played a positive role in promoting high-quality development. Considering that enterprises are the main players in transforming energy consumption patterns and high-quality development, we investigated the impact of imported intermediate goods on EEE from a microfield perspective. The empirical results showed that imported intermediate goods significantly contributed to EEE and that firms’ innovation capacity and productivity are the corresponding influencing mechanisms. The effects of importing intermediate goods in foreign-invested enterprises, enterprises in the eastern and coastal regions and capital-intensive enterprises are more obvious in improving EEE. Further expansion of imports of intermediate goods, enhancement of enterprises’ capacity for independent innovation, deepening structural reforms and accelerated development of the digital economy can help enhance the promotional effect of imports of intermediate goods on enterprises’ EEE.

Does the environmental tax influence the siting of foreign-invested manufacturing enterprises? Evidence from China

Based on unique firm-level microdata, this study adopts the conditional logit model to empirically evaluate the impact of the environmental tax on the siting of foreign-invested manufacturing enterprises. We also explore the trade-offs of the environmental tax by assessing its economic costs and benefits. This study finds that the environmental tax has a statistically significant and negative impact on the siting of foreign-invested enterprises, as verified by a series of robustness checks. This result implies a trade-off of the environmental tax, reducing pollutant emissions at the expense of damaging economic growth. Heterogeneous analysis finds that the siting is remarkably more sensitive for foreign-invested enterprises that are sole-venture, in high-polluting industries, small-scale, or hosted by developing countries. The other trade-off is outlined: although the environmental tax reduces the number of newly registered foreign-invested enterprises, it brings some economic benefits by making the structure of foreign investment cleaner and more advanced.

Decomposing the carbon footprints of multinational enterprises along global value chains

Significant environmental impacts of multinational enterprises (MNEs) are beyond firms and countries because of their cross-border production-sharing activities. In this paper, we trace MNEs’ carbon footprints (CFs) to the upstream along global value chains (GVCs) and analyze the driving factors that lead to changes in MNEs’ CFs through hierarchical structural decomposition analysis. Our findings show that the distribution of MNEs’ CFs is highly consistent with the distribution of their GVC production networks, where these CFs are mainly concentrated in advanced economies, and emerging markets and developing economies only account for a small but gradually increasing share. Further, MNEs’ CFs are mainly attributed to medium high/high-tech manufacturing, especially in emerging markets and developing economies, where over one-half of these firms’ CFs are generated in computer, electronics and optical products and motor vehicle production. Finally, we analyze the different impacts of changes in the emissions of domestic-owned enterprises, foreign-invested enterprises in host countries and emissions generated abroad on MNEs’ CFs as well as the main driving factors leading to these changes in the US, Germany, China, India, Mexico and Singapore. Our findings provide support for MNEs’ whole global-value-chain emission control to realize global carbon neutrality and shed light on possible pathways for mitigating the domestic carbon emissions of economies that are deeply integrated into GVCs.

International transmission of exchange rate volatility: Evidence from FIEs’ investments in China

This paper studies the cross-border transmission of exchange rate volatility through foreign-invested enterprises (FIEs)’ investments. We find that exchange rate volatility in FIEs’ home countries reduces the investments made by FIEs, which is exacerbated in industries with greater external finance dependence. We further confirm that the reduction in investment is due to a decrease in financial support from FIEs’ parent enterprises. By comparing FIEs whose parents are located in countries with different levels of financial development and in sectors with different levels of investment irreversibility, we test two potential channels of transmission, namely, the uncertainty channel and the financing channel. We also attempt to test the potential indirect impact on local firms through the production network.

Institutional difference and foreign direct investment location choice: Evidence from China

AbstractResting upon an extensive data set on foreign invested enterprises (FIEs) in China, we investigate the role of institutional difference in determining the locational choice of foreign direct investment (FDI). Estimation results using firm‐level discrete choice model suggest that FIEs from source countries that are more remote institutionally from the Chinese mainland exhibit a higher degree of sensitivity to regional economic institutions in their choice of FDI location. Furthermore, we find that FIEs coming from countries with better institutions than China are more sensitive to the institutional difference. Interestingly, we find that the deterrent effect of institutional distance on FDI entry is mitigated for FIEs coming from countries with more ethnic Chinese individuals in their overall populations.

The impact of country risk on OFDI : empirical analysis based on cross-border panel data

ABSTRACT Based on the cross-border panel data of China’s outward foreign direct investment (OFDI) from 2011 to 2018, the fixed-effect model (FE) and two-stage least squares (2SLS) are applied in this article for the influence study of country risk on OFDI and the risk mitigation of export credit insurance. It is found that there is a certain negative impact on China’s OFDI from country risks of the host country. From the perspective of insurance and risk management, export credit insurance plays a certain role in risk avoidance for China’s outward foreign investment enterprises. Overseas enterprises can take options from export credit insurance to avoid risks.

Application of multi-criteria Vector Measure Construction Method (VMCM) to assess importance of foreign direct investment (FDI) to host country's regional economy

Foreign Direct Investment (FDI) is an important element supporting the growth of national economies. Through competitive advantage and innovation, foreign-invested enterprises can become an important agent of beneficial structural change and have a positive impact on the host economy as a whole. In general, through the provision of external capital, FDI can contribute to the economic growth of a country hosting the investment and plays a particular role in the regional economy which encompasses all activities of an economic nature pursued in a given area. The article examine the role that foreign-invested companies play in the economy at the regional level. The significance of the foreign direct investment for the regional economy was conducted using the example of sixteen Polish voivodships. For the purpose of the study the Vector Measure Construction Method (VMCM) was used to determine the importance of FDI for the economies of each Polish provinces (voivodships) and to produce their ranking and classification. According to the study findings, voivodships where the examined problem was of a similar nature were assigned to particular classes. A definite leader was the Mazowieckie voivodship, which was the only one to be included in Class I. The most numerous Class II included 11 voivodships, which constituted approximately 70% of the total number of provinces. Four voivodships fell in Class III, comprising entities with the lowest aggregate measures. This means that Polish regions are mostly homogeneous in terms of the importance of foreign direct investment to the performance of their economies.

Solutions for private economic development become a important drive of the economy

The article analyzes the development of Vietnam’s private economy (non-state enterprises) from 2017 to 2021. Research results have shown that, from 2017 to 2021, the private economy has achieved the following achievements. encouraging results in terms of the number of enterprises, the scale of investment capital, and the creation of jobs for society. The private sector has contributed over 39% of the GDP, more than 29% of the state budget, and attracted more than 85% of the country's labor force. However, the development of Vietnam's private economy in recent years is still limited: the proportion of medium and large enterprises in total operating enterprises is still low (6.2%); informal status of the private sector still accounts for a high proportion (88.7%); quality growth and low - profit margins; labor productivity is still low; the alliance and linkage between state-owned enterprises, foreign-invested enterprises, and the domestic private economic sector are not close. Based on analyzing the current situation, the article has proposed 6 solutions to develop Vietnam's private economy, including: (1) Completing the socialist-oriented market economy institution; (2) Formulate a strategy to develop a system of medium and large-scale enterprises that actively participate in the global value chain; (3) Develop a roadmap to formalize household businesses; (4) Investing in the development of processing and manufacturing industries, increasing labor productivity and economic efficiency; (5) Develop a mechanism for joint ventures and linkages between the state-owned enterprises, the foreign-invested sector and the domestic private sector; (6) Promote the building of business culture and enhance the social responsibility of each enterprise.

Markets and Markups: A New Empirical Framework and Evidence on Exporters from China

We develop a new empirical framework to analyse destination-specific markup and quantity adjustments to bilateral exchange rates by exporters. The framework offers two methodological innovations. First, we develop an unbiased estimator of the markup elasticity that correctly isolates marginal costs in large unbalanced panels where the set of markets served by firms varies endogenously with currency movements. Second, we exploit Chinese linguistics to process characters recorded in Chinese custom forms to build a novel, general, product classification distinguishing high and low differentiation goods|which we can use to proxy for exporters' market power. Applying this framework to exporters from China over 2000-2014, we document substantial heterogeneity in destination-specific markup elasticities across product classes and firm types. Conditional on a price change, the average markup elasticity for highly differentiated consumption goods is 32%; markup adjustments explain three quarters of incomplete pass through into import prices for these goods. In contrast, the average for low-differentiation intermediates is only 5%, suggesting that pricing for these goods responds to global, rather than local, economic conditions. Markup elasticities are higher for both state-owned and foreign-invested enterprises than for private enterprises, which, on average, pursue aggressively competitive strategies throughout our sample.

Research on the Dynamic Evolution of Export Product Quality of Chinese Industrial Enterprises: Based on the Dual Dimensions of Quantitative Change and Qualitative Change

Most of the existing studies on the dynamic evolution of Chinese export product quality have been analyzed from an empirical perspective, lacking theoretical investigation of its intrinsic evolution rules. Therefore, this paper defines the connotation of export product quality improvement (quantitative change of export product quality) and export product quality upgrading (qualitative change of export product quality), analysis the connection and difference between them, and constructs the corresponding evaluation indexes by referring to the rules of quantitative change and qualitative change in materialistic dialectics. Based on the data of Chinese industrial exporters from 2000 to 2013, the dynamic evolution of export product quality was measured statistically. The results of the research are as follows: (1) the overall export product quality of Chinese industrial enterprises showed a fluctuating upward trend. Among them, the export product quality of foreign-invested enterprises, large enterprises, and enterprises in the eastern region is higher. (2) From the dimension of quantitative change, the export product quality of Chinese industrial enterprises improved in 2001, 2003-2005, 2007, and 2011-2012, and there are some differences in the improvement of export product quality among enterprises of different ownership, scale, and regions. (3) From the dimension of qualitative change, the number of enterprises that achieve export product quality upgrading is increasing, and the mean and level of export product quality upgrading are improving. Among them, the export product quality upgrading of state-owned enterprises, large enterprises, and enterprises in the western region is higher.

Competition in the Chinese market: Foreign firms and markups

This study addresses the issues of whether foreign firms outperform domestic firms in markups and whether the presence of foreign firms dampens the markup of their local counterparts in the Chinese market. Analysis of a firm-level panel dataset, we find foreign-invested enterprises (FIEs), particularly those not from Hong Kong–Macau–Taiwan, charging a higher markup. Estimations on the determinants of markups highlight the important roles played by technological capability and intangible assets. The potential channels and mechanisms are also discussed. Entering the Chinese market through joint ventures helps FIEs raise markups, and this effect is notable for HMT–FIEs, which might have a relative advantage of cultural proximity than other FIEs. Sharing equality with national capital to construct political connection (guanxi) also helps facilitate markups. Crucially, foreign presence is positively related to local firms’ markups, suggesting that the spillover and linkage effects dominate the competition pressure brought about by foreign direct investment.

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.