Chinese Transnational Corporations at the World Investment Field

390
DOI: 10.20542/0131-2227-2017-61-9-45-53

M. Luchko (mluchko@bk.ru),
Lomonosov Moscow State University, 1/46, Leninskie Gory, Moscow, 119234, Russian Federation 



Abstract
The author analyses main features of China’s involvement in the world investment activities. On the one hand, China has become one of the world’s key recipients of foreign direct investment (FDI) over the last years. On the other hand, in recent times China managed to strengthen its role as one of the world’s largest origins of FDI together with the United States and Hong Kong (China). The author indicates that the main drivers of this process are the Chinese biggest transnational corporations (TNCs). The amount of them is growing quickly and their positions in the international rankings (UNCTAD, Forbes-2000, Fortune-500) have improved markedly over the past 10 years. According to statistics, there was a six-fold increase in the amount of Chinese TNCs during this period. The leading companies of China include the biggest banks, the oil and gas companies and Internet giants (Alibaba, Baidu, Tencent). Currently, the Chinese government is carrying out a “go out” strategy adopted in the early I century. It is based on the desire to increase exports of goods and services, labor and capital, as well as to encourage further imports of capital, new technologies and natural resources for the national socio-economic development. The Chinese foreign diaspora which exists in 150 countries plays an important role in these processes. In fact, this strategy means further transnationalization of Chinese business. As an example, the author considers international strategies of well-known Chinese companies Huawei and Haier which have already become the global market players. The paper also investigates the factors that are behind the growing FDI activity of the Chinese companies, including the market factors, the factors of production costs, the trade barriers, the conditions of investment climate, etc. A lot of Chinese investment projects are being developed on the territory of the USA. Respectively, the scale and the structure of Chinese companies’ FDI in the USA are analyzed as well. The article also outlines the sectors with the largest share of FDI (energy industry, real estate, IT&T) and specifies the most attractive USA states for Chinese investors (New York and California). Moreover, the author analyzes the ratio between greenfield investment and cross-border mergers and acquisitions (M&A), where the targets for Chinese investors are the US-based companies. A marked trend of purchasing the high-tech assets by Chinese companies and start-ups in the United States in recent years is stressed. By analyzing statistical data and information obtained from China-related studies the author points to the upcoming economic phenomenon that can be described by the slogan “Chinese go global”.

 


Keywords

foreign direct investment (FDI), transnational corporations (TNC), China, “go out” strategy, home country, host country, motives of FDI, greenfield investment, cross-border M&A, high-technology assets 


REFERENCES

1. World Investment Report 2016: Investor Nationality: Policy Challenges. New York, Geneva, UNCTAD, 2016. 232 p.

2. China Going Global Investment Index. Available at: http://www.eiu.com/public/topical_report.aspx?campaignid=ChinaGoingGlobal (accessed 20.03.2017).

3. Garcia-Herrero A., Le Xia, Casanova C. China’s Outbound Foreign Direct Investment: How Much Goes Where After Round-Tripping and Offshoring? Available at: https://www.bbvaresearch.com/wp-content/uploads/2015/06/15_17_Working-Paper_ODI.pdf (accessed 20.09.2016).

4. Forbes. The World’s Biggest Companies. 2016. Available at: http://www.forbes.com/global2000/list/#tab: overall (accessed 20.06.2016).

5. The Fortune 2016 Global 500. Available at: http://beta.fortune.com/global500/list/filtered?hqcountry=China (accessed 20.06.2016).

6. Mikheev V., Lukonin S. Kitai: Novye trendy razvitiya na rubezhe 2015–2016 gg. [China new development trends in 2015–2016]. Mirovaya ekonomika i mezhdunarodnye otnosheniya, 2016, no. 6, pp. 24-34.

7. Ivanov A.V. Programma Kitaya “idti vovne” i nekotorye aspekty rossiisko-kitaiskikh otnoshenii [CNR Programme “go out” and some aspects of Russia-CNR relationships. Available at: http://www.synologia.ru/authors‑167 (accessed 10.02.2016).

8. The 2016 A.T. Kearney FDI Confidence Index. Available at: https://www.atkearney.com/documents/10192/8064626/2016+A.T.+Kearney+Foreign+Direct+Investment+Confidence+Index%E2%80%93FDI+on+the+Rebound.pdf/e61ec054-3923-4f96-b46c-d4b4227e7606 (accessed 05.09.2016).

9. Mozias P. “Novaya normal'nost'” kitajskoi ekonomiki [“New normal” of China’s economy]. Mirovaya ekonomika i mezhdunarodnye otnosheniya, 2015, no. 12, pp. 15-29.

10. Freeman R.B., Huang W. China’s “Great Leap Forward” in Science and Engineering. Available at: https://pdfs.semanticscholar.org/6c36/b0cb8aec7e97bb587f523d99bce9471f37e5.pdf (accessed 15.03.2017).

11. Gel’bras V.G. Rossiya v usloviyakh global'noi kitaiskoi migracii [Russia in Conditions of Global Chinese Migration]. Moscow, 2014. 204 p.

12. Gordon G. Chang. Big Investors Dumping China Icons Alibaba and Lenovo. Available at: http://www.forbes.com/sites/gordonchang/2016/06/05/big-investors-dumping-china-icons-alibaba-and-lenovo/#42d799868fa4 (accessed 05.06.2016).

13. Haier Global. Available at: http://www.haier.net/en/about_haier/haier_global/haierOverseasMarket (accessed 23.10.2016).

14. Huawei 2016 Annual Report. Available at: http://www.huawei.com/en/about-huawei/annual-report/2016 (accessed 10.02.2017).

15. Lee M. China's Tech Giant Huawei Leads the Charge for New Patents. March 18, 2016. Available at: http://www.forbes.com/sites/melanieleest/2016/03/18/chinas-tech-giants-chase-patent-dreams/#2a6dbf772186 (accessed 18.03.2016).

16. Dasgupta S. Chinese Focus Turns Abroad as Domestic Market Stalls. January 11, 2017. Available at: http://www.thenational.ae/business/economy/chinese-focus-turns-abroad-as-domestic-market-stalls (accessed 20.01.2017).

17. Hanemann T., Gao C. Record Deal Making in 2016 Pushes Cumulative Chinese FDI in the US above $100 billion. December, 2016. Available at: http://rhg.com/notes/record-deal-making-in-2016-pushes-cumulative-chinese-fdi-in-the-us-above-100-billion (accessed 10.01.2017).

18. Hanemann T., Gao C. Rhodium Group. Chinese FDI in the US: 2015 Recap. January 19, 2016. Available at: http://rhg.com/notes/chinese-fdi-in-the-us-2015-recap (accessed 19.01.2016).

19. Zi L. Technology Giants Pump up Startups in US Expansion. 10.09.2014. Available at: http://www.chinadaily.com.cn/world/2014-10/08/content_18707336.htm (accessed 03.01.2016).

20. Forbes. The World's Biggest Public Companies 2016. Available at: http://www.forbes.com/global2000/#/page:9_country: China (accessed 03.09.2016). 


Registered in system SCIENCE INDEX

For citation:
Luchko M. Chinese Transnational Corporations at the World Investment Field. Mirovaya ekonomika i mezhdunarodnye otnosheniya, 2017, vol. 61, No 9, pp. 45-53. https://doi.org/10.20542/0131-2227-2017-61-9-45-53



Comments (0)

No comments

Add comment







Indexed
 
Current Issue
Submit an Article
Announcement

Dear readers!
Please note that free access to full-text issues of the Journal is being opened at our WEB-site after 6 months of the date of publications.The work on deepening the open archive of full-text issues will be continued.


Dear colleagues, authors and readers!
We kindly request you to turn to editor-in-chief and executive secretary directly concerning reviewing scientific publications in our journal. Only editor-in-chief takes decision on order and publication the reviews!

Dear readers!
This is to inform the researchers of the Institute of World Economy and International Relations that electronic versions of the I, II, III issues of 2020 of French magazine Politique étrangère are now available. Those who are interested, please personally address to the editorial staff of MEMO Journal (room 18-17) with an electronic media.
NEW SECTION

In response to the challenges of our time the Editorial board continues to open new thematic rubrics:

“World Energy Sector after Pandemic”. We plan to publish articles presenting in-depth analysis of influence of Pandemic on the global energy sector and forecasts of further developments in its various branches.

“Civilization processes of modern development” is a new rubric opened by MEMO Journal in 2020. It will be devoted to the analysis of the influence of civilizational factors and inter-civilizational interactions on the political and socio-economic development of the world at whole, regions and countries.

“Africa today and tomorrow”The rubric devoted to contemporary issues of Africa which is attracting growing interest of the world's leading actors. We plan to publish the articles analyzing the status of statehood, socio-economic and political development of the countries of Black continent, as well as the integration processes between them.

CONTEST!

"World Eonomy and International Relations" announces a contest for the best joint academic publications of domestic and foreign researchers and experts in topical issues of the world economy and international relations. The winners will be selected according to the results of peer reviewing and discussion at the Editorial Board. The articles will be published in priority order.

SUBSCRIBE TO THE JOURNAL

The print version of “World Economy and International Relations” journal is distributed by advance subscription only, and is not offered for retail sale. To subscribe please address to any post office in Russia by referring to the Federal Postal Service Union Catalogue, section “ARSMI”, the journal index is 70542. The subscription may be made for the whole subscription period or starting from any nearest available month for desired number of issues.

To purchase the full-text electronic version of the journal’s issue/article please address to the WEB portal of Scientific electronic library eLIBRARY.ru or URL: https://press.gaugn.ru/.

In journal
Years
2020 | 2019 | 2018 | 2017 | 2016 | 2015 | 2014 | 2013 | 2012 | 2011 | 2010 | 2009 | 2008 | 2007 | 2006 | 2005 | 2004 | 2003 | 2002 | 2001 | 2000 | 1999 | 1998 | 1997 |

The author’s opinions may not coincide with the position of editorial