Wooing the new Chinese businesses: five short-term policies to attract direct investment

Bala Ramasamy, Matthew Yeung

Research output: Contribution to journalArticlepeer-review

2 Citations (Scopus)

Abstract

Purpose: The purpose of this paper is to identify location factors that Chinese managers look for when making internationalization decisions and how the factors stack up in perceived importance. Over the past ten years, Chinese enterprises have become more multi-national in nature. China’s outward foreign direct investment (FDI) has been growing at a phenomenal rate. In 2012, China became the third largest investor, after the USA and Japan; and the largest investor among developing countries. How can host governments attract more of this Chinese capital? What are some short- to medium-term policies that host governments can initiate to make their respective nations attractive to Chinese companies? Design/methodology/approach: The authors consider these questions by using a best-worst choice exercise among 114 senior corporate decision makers of Chinese companies who have or are planning to globalize. We rank 16 most common determinants that influence FDI location choice and evaluate their degree of importance. Findings: The authors propose five “low hanging fruits” that policy makers should consider that could ensure their countries come within the radar of Chinese multi-nationals. These include promoting a clean and efficient business environment and strengthening/establishing political and economic relationships with China. Originality/value: The originality of this study lies in the methodology of the study that forces respondents to make a trade-off in their decisions, which in a way is closer to reality. The respondents are also actual decision makers in their companies with regards to international investment decisions.

Original languageEnglish
Pages (from-to)3-11
Number of pages9
JournalJournal of Business Strategy
Volume37
Issue number5
DOIs
Publication statusPublished - 2016

Keywords

  • China
  • Economic relationship
  • International business strategies
  • Location decisions
  • Outward FDI
  • Political relationship

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