Abstract
Chapters 5 and 6 turn the focus from public policy and power relations to private organisations, in an international setting. Chinese firms’ general characteristics are studied first. The history of their internationalisation since Deng Xiaoping reveals that government initiated and sponsored it at first, transitioning to external market incentives first by a process of OEM and JV agreements, mergers and acquisitions, and then through greenfield subsidiaries. Home market saturation, cost advantages, technological need, Party-state support, Western willingness to sell up all facilitated. So much technological and managerial know-how was transferred to Chinese firms that, combined with the strengths born of the home market’s institutional voids, they have become global competitors. The authors’ data show that they outcompete local incumbents in the host markets of Latin America.
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Notes
- 1.
Williamson and Yin (2009, p. 78).
- 2.
Along with the IPOs of the Agricultural Bank of China (ABC) in 2010 and Alibaba in 2014 that raised US$19 and US$21.8 billion, respectively, they are the three world’s largest flotations as in 2016.
- 3.
“Over time, the TVEs grew fiercely competitive with each other, and, eventually, with the SOEs. They also became extremely successful, reinvesting their profits to fund growth” (Spar & Oi, 2006, p. 7). These enterprises have also helped in the transfer of labour from rural areas to non-agricultural sectors, and especially became vehicles for the government (local and national) to achieve the objectives of their reform and development strategies (Chen, 2006).
- 4.
An example is the contrast between the villages of Huaxi (Jiangsu province) and Nanjie (Henan province), and their township and village enterprises. Huaxi is one of China’s richest villages, where every family has a net worth of more than RMB1 million since 2005, as many of the former village farmers are large shareholders of the village enterprise, Jiangsu Huaxicun Co Ltd, listed since 1999 on the Shenzhen Stock Exchange with a current market capitalisation of more US$1.1 billion. By contrast, in Nanjie Communism is alive and well, and the “works of Chairman Mao are still revered. The village and its enterprise is run on a long-forgotten salary plus supply or need system (instead of a cash bonus), where basic resources such as food, property, schools and healthcare are first allocated on a needs basis” (Markus, 2002; Zhang, 2010, p. 15).
- 5.
It has been suggested that China is using trade and investment agreements, among other things, to secure market economy recognition and status from its trade partners (ECLAC, 2005, 2007). Most of the states that have recognised China as a market economy are developing countries; in addition, ECLAC (2007) stated that many of these agreements do not include provisions for sensitive matters such as intellectual property rights, the liberalisation of sectors, or issues related to labour or the environment. The latter point may explain why China is pursuing agreements with developing countries (ECLAC, 2007), as it will probably find a muted reception in the industrialised countries if, for example, these sensitive areas are not included in the agreements.
- 6.
Europe has been a major source of FDI in Latin America since the beginning of the twentieth century, with the UK being the largest source for most of the first 90 years. Spain started to become a relevant player “in 1991 when Telefónica won the bid for the privatisation of Entel in Argentina and reached a peak (in terms of the amount of investment) in 1999 when Repsol acquired YPF in Argentina for around €15 billion” (Fornes & Cardoza, 2009). After 1997 Latin America received around 60% of Spanish FDI (as an annual average), which positioned Latin America as the first destination for Spanish companies, and Spain as the second-largest international investor in the region after the USA (Fornes, 2009; Fornes & Butt-Philip, 2009; Fornes & Cardoza, 2009).
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Fornes, G., Mendez, A. (2018). Chinese Dragons Disembarking in Latin America. In: The China-Latin America Axis. Palgrave Macmillan, Cham. https://doi.org/10.1007/978-3-319-66721-8_5
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