Globalization Strategies of Chinese Companies: Current Developments and Future Prospects
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Globalization Strategies of Chinese Companies: Current Developments and Future Prospects Robert Taylor School of East Asian Studies, Floor 5, Arts Tower, University of Sheffield, Western Bank, Sheffield S10 2TN, UK E-mail: [email protected]
The object of this study is to examine the globalization strategies of Chinese companies which, it is contended, have been influenced by China’s current stage of economic development. Since the initiation of its open-door policy in 1978, China has, in this respect, followed to a considerable extent the path of other Asian countries. Currently, China’s foreign direct investment (FDI) is present in 139 states and territories but heavily concentrated in Australia, the United States, Hong Kong, Thailand, Russia, New Zealand, South Africa and Macao. Such ventures overseas are, however, small scale, with an average capitalization of US$ 3 million. This figure may nevertheless be set to rise, as Chinese companies move into more high-tech ventures; to date, China’s firms have been more heavily involved in the service and processing sectors. In addition, China’s FDI has been constrained both by government regulation of the economy and lack of experience on the part of China’s companies in international competition. Accordingly, the role of both business and government in the promotion of managerial, financial and linguistic competence is assessed. In conclusion, the study summarizes the salient features of Chinese FDI to date and the future prospects for the globalization of China’s companies. Asian Business & Management (2002) 1, 209–225. DOI: 10.1057/palgrave.abm.9200011 Keywords: globalization; resource extraction; services; manufacturing investment
Introduction: Chinese Government Policy and Ideological Justification In 1978, at the Third Plenum of the Eleventh Central Committee of the Chinese Communist Party (CCP), China’s leaders embarked on an open-door policy, engaging in a transition from a command to a market economy, and by the 1990s their country was a major recipient of foreign direct investment (FDI) and playing an increasing role in international trade. Contemporaneously, from the 1980s onwards there was a growing trend towards the globalization of international business, involving trade liberalization, capital movement and the diffusion of information technology (Lu¨, 2000). A measure of China’s success in the utilization of FDI, the objectives of which are the acquisition of capital, management skills and advanced technology, has been rapid economic growth,
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necessitating the transformation and diversification of industrial sectors. To aid such restructuring, the Chinese government, as a deliberate act of policy, called for outward FDI, which began in the 1980s but had accelerated by the late 1990s. In fact, a number of policy pronouncements have echoed this theme; witness President Jiang Zemin’s statement at the Fourteenth and Fifteenth Congresses of the CCP in 1992 and 1997, respectively, and
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