The Evolution of Country and Firm Specific Advantages and Disadvantages in the Process of Chiness Firm Internationalization
The Evolution of Country and Firm Specific Advantages and Disadvantages in the Process of Chinese Firm Internationalization
Svetla Marinova* University of Birmingham, UK John Child University of Birmingham, UK Marin Marinov University of Gloucestershire, UK
*Corresponding Author
1
The Evolution of Country and Firm Specific Advantages and Disadvantages in the Process of Chinese Firm Internationalization Introduction For a long time China has been attracting a huge volume of inward FDI, the stock of which has accumulated to US$758.9 billion by 2007 (CIA World Factbook, 2009). More recently outward FDI has grown steadily and in 2008 reached an annual figure of US$52.2 billion that was in sharp contrast with the global downturn in FDI flows (Davies, 2009). A key factor in this shift has been the increasing encouragement of the internationalization of Chinese firms by the government, which in 2000 announced the “Going out” policy as a national priority (Guangsheng, 2002). The implementation of this policy is supported by a sizeable trade surplus, a positive saving-investment ratio and the attempt of the Chinese authorities to increase income from overseas ownership of fixed assets (Globerman & Shapiro, 2009). Furthermore, the accumulation of technological and marketing expertise by leading Chinese firms has accelerated the involvement of other Chinese enterprises in outward investment (Tong & Li, 2008). However, Chinese outward FDI has only recently started to attract the attention of scholars. Studies have addressed the motives, driving forces and trends of outward FDI from China (Liu & Li, 2002; Deng, 2004; Child &
2
Rodrigues, 2005; Liu et al., 2005; Buckley et al., 2007; Rui & Yip, 2008, Morck et al., 2008). As an attempt to account for the success or otherwise of Chinese internationalization, Rugman and Li (2007) have explored the importance of firm specific advantages (FSAs) and country specific advantages (CSAs). Little is known, however,
Svetla Marinova* University of Birmingham, UK John Child University of Birmingham, UK Marin Marinov University of Gloucestershire, UK
*Corresponding Author
1
The Evolution of Country and Firm Specific Advantages and Disadvantages in the Process of Chinese Firm Internationalization Introduction For a long time China has been attracting a huge volume of inward FDI, the stock of which has accumulated to US$758.9 billion by 2007 (CIA World Factbook, 2009). More recently outward FDI has grown steadily and in 2008 reached an annual figure of US$52.2 billion that was in sharp contrast with the global downturn in FDI flows (Davies, 2009). A key factor in this shift has been the increasing encouragement of the internationalization of Chinese firms by the government, which in 2000 announced the “Going out” policy as a national priority (Guangsheng, 2002). The implementation of this policy is supported by a sizeable trade surplus, a positive saving-investment ratio and the attempt of the Chinese authorities to increase income from overseas ownership of fixed assets (Globerman & Shapiro, 2009). Furthermore, the accumulation of technological and marketing expertise by leading Chinese firms has accelerated the involvement of other Chinese enterprises in outward investment (Tong & Li, 2008). However, Chinese outward FDI has only recently started to attract the attention of scholars. Studies have addressed the motives, driving forces and trends of outward FDI from China (Liu & Li, 2002; Deng, 2004; Child &
2
Rodrigues, 2005; Liu et al., 2005; Buckley et al., 2007; Rui & Yip, 2008, Morck et al., 2008). As an attempt to account for the success or otherwise of Chinese internationalization, Rugman and Li (2007) have explored the importance of firm specific advantages (FSAs) and country specific advantages (CSAs). Little is known, however,