Chinese multinationals and the state: an institutional perspective

Click on the DOI link to access the article (may not be free).Chinese outbound foreign direct investment (OFDI) remained largely insignificant until 2004, and Chinese multinationals were rarely heard about in the news. Yet, China’s OFDI flow in 2010 amounted to more than $60 billion (see Figure 4.1). By 2010, about 17 000 Chinese companies had invested abroad, reaching virtually every country in the world. China’s shopping spree continues in defiance of the current global economic crisis. High-profile acquisitions include Sinopec’s $7.2 billion purchase of Addax, a Swiss oil company with extensive holdings in Iraq, in 2009. More recently, Sichuan Tengzhong Heavy Industrial Machinery Co., a Chinese heavy construction equipment maker, acquired General Motors’ Hummer brand for US$150 million, and Geely acquired the Volvo brand from Ford for US$1.8 billion in 2010. Chinese OFDI has been characterised by a number of unique features: (1) Chinese multinational firms are backed by strong government support, unlike their counterparts from other countries; (2) large state-owned enterprises are the key investors among all those going global; (3) Chinese firms invest with lightning speed, primarily through acquisitions; (4) Chinese firms have invested in a large spectrum of industries, ranging from natural resources to high-technology sectors; and (5) most Chinese firms do not normally possess advanced technologies