Foreign direct investment in China: beyond the representative office

Nowadays, China is one of the most important destinations for international expansion of firms from all over the world. Based on the traditional theory on foreign direct investment and the resource-based view of the firm, this paper analyzes the influence of various tangible and intangible firm-specific factors on the choice amongst three different modes of entry into China: representative office, joint venture and wholly-owned subsidiary. The results obtained suggest that the size of the investing firm, its performance as well as its experience regarding the country have a positive influence on the choice of types of foreign direct investment that involve a high level of resources commitment. In addition, the specific aim of the project affects these relationships

How “Belt and Road” initiative implementation has influenced R&D outcomes of Chinese enterprises: asset‐exploitation or knowledge transfer?

As an Outward Foreign Direct Investment (OFDI) promotion policy which aims to transform and upgrade Chinese firms, the ‘Belt and Road’ (B&R) Initiative has been widely discussed with regard to its influence on R&D activities. Many studies have associated this topic with the relationship between OFDI and R&D activities, however, the difference between the OFDI promotion policy and the OFDI has been neglected, resulting in little understanding of the effects of B&R implementation on R&D activities related to established OFDIs. By analyzing how the implementation of B&R affects asset-exploitation and knowledge transfer, this paper provides a new perspective to help understand if and how Chinese firms that have affiliates in B&R countries gain positive R&D outcomes from such a policy. This study examines a sample of Chinese-listed manufacturing firms from 2013 to 2017. Propensity Score Matching is used to construct a counterfactual framework and control for confounding problems from new OFDI entries. Difference-in-Differences is used to infer the policy effect of B&R implementation on R&D outcome of Chinese firms that have affiliates in B&R countries. Results show a continuously positive effect on R&D outcomes mediated by the increase in R&D expenditure, along with a directly weak-positive effect on R&D outcomes in the short-run. The continuously positive effect may be viewed as a result of an improvement in asset-exploitation, while the directly weak-positive effect is more a result of an increase in knowledge transfer, leaving out technology transfer. Regarding differences among Chinese firms that invest in B&R countries with varying levels of economic development, this study also found no differences between firms that have B&R affiliates in developed versus developing countries. This finding implies that Chinese firms have experienced little or no increase in technology transfer through B&R implementation. Overall, these findings, to some extent, illustrate Chinese firms’ behavior patterns in R&D management related to established OFDIs in light of OFDI promotion policies and help policy makers assess and understand the effects of the B&R implementation more deeply

Can Globalisation and Global Localisation Explain Foreign Direct Investment? Japanese Firms in Europe

This paper uses logit regression on the responses of 383 Japanese manufacturing firms located in the member countries of the European Union to investigate the motives for foreign direct investment. Japan External Trade Organisation (JETRO) data, as published in their 8th Annual Survey (October 1992) classified by industry, were used. The results confirm that decisions leading to FDI cannot be explained by a single factor and, furthermore, different types of FDI are influenced by different combinations of motives.Globalisation, Foreign Direct Investment, Internationalisation, European Union,