The Role and Importance of the Chinese Government for Chinese Outward Foreign Direct Investments

Chinese outward direct investments show a strong positive trend over recent years and have attracted considerable attention from academia and the business press. Many observers and commentators express interest in the role the Chinese government plays in the activities and decision-making of Chinese multinational enterprises (MNEs) in connection with their foreign direct investments (FDI). This article makes a contribution by investigating the relationship between the Chinese government and MNEs in connection with their outward foreign direct investment (OFDI). We present a 2x2 matrix where one dimension includes the interest (high/low) of the Chinese government and the other the interest of MNEs (high/low). We argue that, in market-seeking and strategic asset-seeking, both interests are aligned and high, while for efficency-seeking motives Chinese company interests are high but government interests are relatively low. In regard to resource-seeking motives and balancing foreign currency reserves, Chinese government interests are high but company interests relatively low. Our matrix allows us to understand the role and interests of the Chinese government in the decision-making process as well as the relationships with Chinese companies in outward foreign direct investments