Abstract
Since liberalization in 1978, China has been a major destination for foreign direct investment. This changed after 1990 when the Chinese government encouraged Chinese enterprises to expand overseas. Factors driving this internationalization included the government’s objective of playing a larger international role and strengthening the international competitiveness of Chinese enterprises. State enterprises were the first to respond. This chapter describes the process of “going out” and the twin objectives of state enterprises to support the government’s strategy of extending its influence and to seek markets. The Bank of China’s expansion in Malaysia illustrates the first objective, ZTE’s internationalization the second. The recently launched Belt and Road Initiative will see an expanded role for Chinese state enterprises.
Somewhere ages and ages hence:
Two roads diverged in a wood, and I—.
I took the one less traveled by,
And that has made all the difference.
The Road Not Taken, by Robert Frost.
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Notes
- 1.
As discussed later in this chapter, China should be in stage 2 of Dunning’s (1981) Investment Development Path and a recipient of primarily inward foreign direct investment.
- 2.
OFDI data for the BRICS countries other than China are from the OECD database at https://data.oecd.org/fdi/fdi-flows.htm.
- 3.
The studies they reviewed referenced more than 12 different theories, with Dunning’s OLI paradigm most common, followed by those based on the RBV, the IBV, and the Uppsala model (Berning & Holfbrugge, 2012: 174).
- 4.
- 5.
Van Wyk (2009) estimated that the state enterprise share of OFDI flows was 73.5% in 2003, 82.3% in 2004, and 83.2% in 2005.
- 6.
The plan calls for accelerating China’s “Going Out” policy through, first, expanding outward investment; second, emphasizing the equal importance of FDI in China and Chinese outward investment; and, third, transformation of China’s trade and outward investment models (Xu, 2011. 14).
- 7.
The Sixth Forum on China-Africa Cooperation (FOCAC) was held in Johannesburg, South Africa, in 2015. In this forum, China committed to investing $60 billion in Africa (Sun, 2015).
- 8.
These failed deals include CNOOC (China) and Unocal (US), Haier (China) and Maytag (US), Huawei (China) and 3Com (US), and Chinalco (China) and Rio Tinto (Australia).
- 9.
As far back as 2009, Van Wyk (2009) predicted that “as Chinese firms become fully integrated into the global market, increasingly accountable to shareholders”.
- 10.
Swanson (2017) cited the examples of Huaxin buying 85% of French telecom company Alcatel-Lucent; Alibaba spending $220 million for a 20% stake in mobile video app Tango and joining in a $250 million fundraising round for car service Lyft; and Baidu investing in Uber.
- 11.
See the websites for BOC Singapore (http://www.bankofchina.com/sg/aboutus/ab1/201001/t20100120_955880.html) and BOC Malaysia (http://www.bankofchina.com/malaysia/en/aboutus/ab1/201211/t20121109_2133238.html)
- 12.
- 13.
For an example of how Chinese enterprises coexist in Malaysia, see Li and Cheong (2017).
- 14.
This section draws heavily from the authors’ published paper (Li & Cheong, 2017) in the Journal of Contemporary Asia. Permission by the Journal publisher Taylor and Francis to use content from this paper in this chapter under its Authors’ Assignment of Copyright Agreement, clause 4(x), is gratefully acknowledged.
- 15.
Examples of its homegrown technology are its multimode phones that work on several systems (including GSM/WCDMA and GSM/TDSCDMA) simultaneously, and its Gogo technology for mobile broadband internet, developed with Qualcomm, that is in use on most airlines today (Fan & Gao, 2016: 229).
- 16.
Deng’s (2015: 119) use of “responsible power” is with reference to President Clinton’s 1995 remark that while the US welcomed China to the great power table, great powers had great responsibilities. These responsibilities were framed by the international system the US created after the Second World War.
- 17.
Casarini (2015) argues that together with the benefits come the risks of difficulty to frame a common stand in dealing with Beijing, a popular backlash, and more difficult relations with Washington.
- 18.
PwC (2017: 19–23) details six main economic corridors running through Eurasia and Southeast Asia.
- 19.
Devonshire-Ellis (2017) has a listing of papers critical of the BRI.
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Li, R., Cheong, K.C. (2019). “Going Out”, Going Global, and the Belt and Road. In: China’s State Enterprises. Palgrave Macmillan, Singapore. https://doi.org/10.1007/978-981-13-0176-6_6
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