Chinese Manufacturing Firms’ Overseas Direct Investment (ODI): Patterns, Motivations and Challenges

Abstract

This paper examines the more recent phenomenon of China's outward direct investment (ODI), which has surged since 2004 to make China the world's largest developing economy investor and fifth largest investor after United States, France, Japan and Germany. Wang and Wang focus on the ODI of China's manufacturing substanitially different from the world that faced multinational corporations (MNCs) decades ago. As such, their motivations and competitive advantages are also quite different, with the majority of Chinese firms seek technology, rather than cheap labour, and with the support of a range of preferential policies under the central government's "going out" strategy. This (often non transparent) government support poses the fairly unique problem facing Chinese firms in the global markets: that of convincing host-country political parties, lobby groups, competitors, communities and the media that "ODI with Chinese characteristics" is not something to be feared.

Keywords: China FDI, China Goes Global, China Going Out Strategies