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Chinese MNCs as China’s New Long March: A Review and Critique of the Western Literature

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Abstract

Chinese outward foreign direct investment (COFDI) has captured the imagination of international business academics, journalists, and analysts of Chinese foreign economic policy. While these students of COFDI have added greatly to our knowledge, they have not adequately considered the politico-economy of COFDI. Specifically, they have not sufficiently evaluated the degree to which COFDI is driven by political versus economic considerations, the extent to which political considerations influence the overseas operations of Chinese multinational corporations (MNCs), or the political ramifications of COFDI for host countries, international institutions, or China’s interactions with third parties. Reviewing the Western literature, this article provides useful background information about COFDI, distills two general schools of thought about the politico-economy of COFDI—i.e., the “Beijing as Puppeteer” camp and the “Business of Business is Business” camp, and highlights a number of shortcomings with each. As well, it suggests a number of ways in which the extant literature can move forward and makes clear the importance of tracking the development of Chinese MNCs.

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Notes

  1. Wong and Chan, “China’s Outward Direct Investment,” p. 275.

  2. Rui and Yip, “Foreign Acquisitions by Chinese Firms,” p. 213; and [5].

  3. Wang, “The Motivations behind China's Government-Initiated Industrial Investments Overseas,” p. 188.

  4. For some Beijing is a puppeteer. [10, 11]; and [12]. For others, economic factors are the key drivers. Rui and Yip, “Foreign Acquisitions by Chinese Firms,” pp. 213–214; and [13]

  5. [15]

  6. Wong and Chan, “China’s Outward Direct Investment,” pp. 275–276; and [16]

  7. Wu, “The Globalization of Corporate China,” p. 7; and [17]

  8. “Testimony of David Marchick [Partner, Covington & Burling LLP] before the U.S.-China Economic & Security Review Commission on The Extent of the Government’s Control of China's Economy, and its Impact on the United States,” May 24, 2007, http://www.uscc.gov/2007/hearings/written_testimonies/, accessed July 8, 2009; [18]; and MOFCOM, National Bureau of Statistics, and State Administration of Foreign Exchange, 2008年度中国对外直接投资统计公报 [2008 Statistical Bulletin of China’s Outward Foreign Direct Investment], p. 3.

  9. Deng, “Investing for Strategic Resources and Its Rationale,” p. 72.

  10. Wong and Chan, “China’s Outward Direct Investment,” pp. 286–288.

  11. Morck, Yeung, and Zhao, “Perspectives on China’s Outward Foreign Direct Investment,” p. 338

  12. MOFCOM, 2008年度中国对外直接投资统计公报, pp. 6, 27–32.

  13. See Frost and Ho, “‘Going Out,’” p. 159; Wu, “The Globalization of Corporate China,” p. 7; Hong and Sun, “Dynamics of Internationalization and Outward Investment,” p. 610; Morck, Yeung, and Zhao, “Perspectives on China’s Outward Foreign Direct Investment,” pp. 339–340; Rosen and Hanemann, “China’s Changing Outbound Foreign Direct Investment Profile,” pp. 2–5; and Schüler-Zhou and Schüller, “The Internationalization of Chinese Companies.”

  14. Wu, “The Globalization of Corporate China,” pp. 8–10; and Rosen and Hanemann, “China’s Changing Outbound Foreign Direct Investment Profile,” p. 4.

  15. Rosen and Hanemann, “China’s Changing Outbound Foreign Direct Investment Profile,” p. 4; and Schüler-Zhou and Schüller, “The Internationalization of Chinese Companies”

  16. Wang, “The Motivations behind China’s Government-Initiated Industrial Investments Overseas,” p. 194.

  17. Hong and Sun, “Dynamics of Internationalization and Outward Investment,” p. 615.

  18. Wang, “The Motivations behind China’s Government-Initiated Industrial Investments Overseas,” p. 189.

  19. Morck, Yeung, and Zhao, “Perspectives on China’s Outward Foreign Direct Investment,” pp. 340–341; and Schüler-Zhou and Schüller, “The Internationalization of Chinese Companies.”

  20. Morck, Yeung, and Zhao, “Perspectives on China’s Outward Foreign Direct Investment,” pp. 343–344.

  21. Steven W. Lewis, “Chinese NOCs and World Energy Markets: CNPC, Sinopec, and CNOOC,” Paper prepared in conjunction with an Energy Study sponsored by the Japan Petroleum Energy Center and the James A. Baker III Institute for Public Policy, Rice University, Houston, Texas, March 2007, p. 4, http://www.rice.edu/energy/publications/docs/NOCs/Papers/NOC_CNOOC_Lewis.pdf, accessed May 15, 2008.

  22. Hong and Sun, “Dynamics of Internationalization and Outward Investment,” pp. 617–619.

  23. Wong and Chan, “China’s Outward Direct Investment,” p. 279.

  24. Hong and Sun, “Dynamics of Internationalization and Outward Investment,” p. 619.

  25. Wu, “The Globalization of Corporate China,” p. 6; Lunding, “Global Champions in Waiting,” p. 11; and Hong and Sun, “Dynamics of Internationalization and Outward Investment,” pp. 619–620.

  26. Rosen and Hanemann, “China’s Changing Outbound Foreign Direct Investment Profile,” p. 20.

  27. Wang, “The Motivations behind China's Government-Initiated Industrial Investments Overseas,” pp. 194–195; and Wong and Chan, “China’s Outward Direct Investment,” pp. 280–281.

  28. Hong and Sun, “Dynamics of Internationalization and Outward Investment,” p. 620.

  29. Wong and Chan, “China’s Outward Direct Investment,” p. 283; and “Testimony of David Marchick.”

  30. Wu, “The Globalization of Corporate China,” p. 7.

  31. Ibid., pp. 19–20.

  32. Wu, “The Globalization of Corporate China,” p. 19; Pamlin and Baijin, Re-think China’s Outward Investment Flows, pp. 19–20; and Rosen and Hanemann, “China’s Changing Outbound Foreign Direct Investment Profile,” p. 20.

  33. Pamlin and Long, Re-think China’s Outward Investment Flows, pp. 20–21.

  34. Lunding, “Global Champions in Waiting,” p. 5.

  35. Morck, Yeung, and Zhao, “Perspectives on China’s Outward Foreign Direct Investment,” p. 349 fn(5).

  36. “China Issues New Rules to Promote, Regulate Outbound Investment,”People’s Daily, March 16, 2009, http://english.people.com.cn/90001/90778/90857/90861/6615294.html, accessed August 20, 2009.

  37. Rosen and Hanemann, “China’s Changing Outbound Foreign Direct Investment Profile,” pp. 20-21.

  38. Pamlin and Long, Re-think China’s Outward Investment Flows, pp. 25–26; and Schüler-Zhou and Schüller, “The Internationalization of Chinese Companies.”

  39. Deng, “Investing for Strategic Resources and Its Rationale,” pp. 72–74; and Rui and Yip, “Foreign Acquisitions by Chinese Firms,” p. 214.

  40. Wong and Chan, “China’s Outward Direct Investment,” pp. 273–274; [20]; and “China’s forex reserve hits 2.1316 trln USD, up 17.84%,” People’s Daily Online, July 15, 2009, http://english.peopledaily.com.cn/90001/90778/90857/90859/6700773.html, accessed July 15, 2009.

  41. Fung, Liu, and Kao, “China’s Outward Direct and Portfolio Investments,” pp. 54–56; and Morck, Yeung, and Zhao, “Perspectives on China’s Outward Foreign Direct Investment,” pp. 342–344.

  42. Pamlin and Long, Re-think China’s Outward Investment Flows, p. 17.

  43. Rui and Yip, “Foreign Acquisitions by Chinese Firms,” p. 217.

  44. Wong and Chan, “China’s Outward Direct Investment,” pp. 284–285; and Hong and Sun, “Dynamics of Internationalization and Outward Investment,” p. 624.

  45. Wu, “The Globalization of Corporate China,” p. 11; and Hong and Sun, “Dynamics of Internationalization and Outward Investment,” pp. 624–625.

  46. Wang, “The Motivations behind China’s Government-Initiated Industrial Investments Overseas,” p. 200; and Wu, “The Globalization of Corporate China,” p. 11.

  47. Ibid., p. 11.

  48. Wong and Chan, “China’s Outward Direct Investment,” pp. 290–291; and Wu, “The Globalization of Corporate China,” pp. 24–26.

  49. Wong and Chan, “China’s Outward Direct Investment,” pp. 284–285, 290, 298–299; Wu, “The Globalization of Corporate China,” pp. 11–12; and Hong and Sun, “Dynamics of Internationalization and Outward Investment,” pp. 620–622.

  50. Hong and Sun, “Dynamics of Internationalization and Outward Investment,” p. 622; Deng, “Investing for Strategic Resources and Its Rationale,” pp. 74–75; and Yip, “Foreign Acquisitions by Chinese Firms,” p. 216.

  51. Hong and Sun, “Dynamics of Internationalization and Outward Investment,” p. 623.

  52. Wong and Chan, “China’s Outward Direct Investment,” pp. 285, 290–291; Wu, “The Globalization of Corporate China,” pp. 13, 24–26; and Hong and Sun, “Dynamics of Internationalization and Outward Investment,” p. 623.

  53. Gao, Woetzel, and Wu, “Can Chinese brands make it abroad?” pp. 54–65.

  54. Wu, “The Globalization of Corporate China,” pp. 22–24, 27.

  55. Rui and Yip, “Foreign Acquisitions by Chinese Firms,” p. 216.

  56. Wang, “The Motivations behind China’s Government-Initiated Industrial Investments Overseas,” pp. 202–204; Hong and Sun, “Dynamics of Internationalization and Outward Investment,” p. 625; and Morck, Yeung, and Zhao, “Perspectives on China’s Outward Foreign Direct Investment,” pp. 345–346.

  57. Wang, “The Motivations behind China’s Government-Initiated Industrial Investments Overseas,” p. 195.

  58. Rosen and Hanemann, “China’s Changing Outbound Foreign Direct Investment Profile,” p. 11.

  59. See, e.g., [22]

  60. Rui and Yip, “Foreign Acquisitions by Chinese Firms,” p. 217; and Morck, Yeung, and Zhao, “Perspectives on China’s Outward Foreign Direct Investment,” p. 347.

  61. Rui and Yip, “Foreign Acquisitions by Chinese Firms,” pp. 218–220.

  62. Wang, “The Motivations behind China’s Government-Initiated Industrial Investments Overseas,” p. 194; Lunding, “Global Champions in Waiting,” pp. 6–7; and Hong and Sun, “Dynamics of Internationalization and Outward Investment,” p. 623.

  63. Hong and Sun, “Dynamics of Internationalization and Outward Investment,” pp. 618–619.

  64. Wang, “The Motivations behind China’s Government-Initiated Industrial Investments Overseas,” p. 198.

  65. Lewis, “Chinese NOCs and World Energy Markets,” esp. p. 61; and Lunding, “Global Champions in Waiting,” p. 4.

  66. Wang, “The Motivations behind China’s Government-Initiated Industrial Investments Overseas,” p. 204; Lunding, “Global Champions in Waiting,” p. 6.

  67. On China’s Harmonious World policy, see, Sujian Guo and Jean-Marc F. Blanchard, eds., Harmonious World and China’s New Foreign Policy (Lanham: Rowman & Littlefield-Lexington Books, 2008). On Wen’s trip to Africa, see “Chinese Premier Encourages Chinese Companies to Contribute to Africa’s Development,” People’s Daily Online, November 7, 2009, http://english.peopledaily.com.cn/90001/90776/90883/6806589.html, accessed November 7, 2009.

  68. Rosen and Hanemann, “China’s Changing Outbound Foreign Direct Investment Profile,” p. 12.

  69. “China Issues New Rules to Promote, Regulate Outbound Investment.”

  70. “Mandatory Environmental Measures to Roll Out for Chinese Companies’ Overseas Projects,” People’s Daily Online, May 29, 2009, http://english.peopledaily.com.cn/90001/90778/90857/90861/6667414.html, accessed 10/28/2009.

  71. Pamlin and Long, Re-think China’s Outward Investment Flows, p. 13.

  72. “China Issues New Rules to Promote, Regulate Outbound Investment.”

  73. “Chinese Premier Encourages Chinese Companies to Contribute to Africa’s Development.”

  74. Adams Bodomo, “Africa–China Relations: Strengthening Symmetry with Soft Power,” Pambazuka News, July 2, 2009, http://www.pambazuka.org/en/category/africa_china/57385, accessed November 23, 2009.

  75. PewResearchCenter, Some Positive Signs for U.S. Image: Global Economic Gloom–China And India Notable Exceptions, June 12, 2008, esp. pp. 35–44, http://www.pewglobal.org, accessed October 6, 2009; and PewResearchCenter, The 2008 Pew Global Attitudes Survey in China: The Chinese Celebrate their Roaring Economy, as They Struggle With Its Costs, July 22, 2008, esp. pp. 19–21, http://www.pewglobal.org, accessed October 6, 2009.

  76. Pamlin and Long, Re-think China’s Outward Investment Flows, pp. 34–41.

  77. See, e.g., [26].

  78. Jilberto and Hogenboom, “China’s Growing Economic and Political Power.”

  79. Vivoda, “China Challenges Global Capitalism,” pp. 22–40.

  80. Frost and Ho, “‘Going Out,’” pp. 158, 165–166; Louisa Lombard, “Africa’s China Card,” Foreign policy, April 2006; http://www.foreignpolicy.com/story/cms.php?story_id=3419, accessed November 5, 2009; and Chen, “Chinese National Oil Companies and Human Rights,” pp. 41–54.

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  1. Department of International Relations, San Francisco State University, 1600 Holloway Avenue, HSS 353, San Francisco, CA, 94132, USA

    Jean-Marc F. Blanchard

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Correspondence to Jean-Marc F. Blanchard.

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The author would like to thank the editor, Matt Ferchen, and Norrin M. Ripsman for their feedback on various ideas contained in this article.

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Blanchard, JM.F. Chinese MNCs as China’s New Long March: A Review and Critique of the Western Literature. J OF CHIN POLIT SCI 16, 91–108 (2011). https://doi.org/10.1007/s11366-010-9131-1

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