China - a General Analysis

CHINA AND INTERNATIONAL BUSINESS

by John Child

Oxford University Press

Contents Introduction 3 1. China’s Growing Role in International Business 4 1.1 Trade 5 1.2 Inward Foreign Direct Investment (FDI) 6 1.3 Motives and Entry Mode 8 1.4 Outward FDI 11 2. China As An Environment For International Business 13 2.1 Market Access 14 2.2 Growing Competition 16 2.3 Institutional Environment 18 2.4 Forms of Business 20 3 Implications For International Business Analysis 21 3.1 The Role of National Institutions 21 3.2 A Formal Analysis of China 's Environmental Complexity5 23 3.3 Strategies for Handling Environmental Complexity 25 3.4 Internationalization of Chinese Firms 27 3.4.1 The Latecomer Perspective 27 3.4.2 Institutional Analysis and the Role of Government 28 3.4.3 Entrepreneurs and Institutions 29 3.4.4 The Liability of Foreignness 30 3.4.5 Modes of Engagement between Chinese and International Firms 30 NOTES 33 REFERENCES 34

Introduction
THIS article discusses China 's growing role in international business. It begins by describing developments in the country 's inward and outward foreign direct investment [FDI] and the forms adopted for such investment. China is both a host environment and active player in the international economy which has become both hugely significant, and which poses new challenges for international business analysis. We continue by considering the kind of environment that China presents for international business, one in which the state continues to be closely involved. In the last section of the chapter, we turn to the implications China has for international business analysis, concerning the role of national institutions, the strategies available to foreign investing firms for coping with environmental complexity, and issues posed by its patterns of outward FDI.

1. China’s Growing Role in International Business
China requires special consideration for a number of reasons. With

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