PowerPoint

Chinese outward investments to emerging markets: evidence

from Latin America Gaston Fornes

Centre for East Asian Studies, University of Bristol, UK and ESIC Business and Marketing School, Madrid, Spain, and

Alan Butt-Philip School of Management, University of Bath, UK

Abstract Purpose – This paper aims to analyse the characteristics of Chinese multinational corporations in other emerging economies using evidence from Latin America (LA) vis-à-vis the features found in previous studies of Chinese companies operating in developed countries. Design – It does this by studying the fit of theoretical frameworks recently developed for Chinese firms, the support from the government and the strength of their capabilities in relation to those of local competitors. The analysis is based on case studies with data collected from a theoretical sample of Chinese companies operating in LA. Findings – The results show that these companies seem to be following a pattern similar to that described by Mathews’s (2006) Linkage–Leverage–Learning, that the support from the government does not seem to play an important role in their internationalisation process, that they appear to have developed a set of capabilities strong enough to compete in the host market (in particular how to combine their strengths with those of local partners) and that they are engaged in a positive cycle of development that helps them to overcome some of the challenges and barriers of operating in Latin American emerging markets by complementing/leveraging their strengths with those of local firms. Originality/value – The findings indicate that Chinese companies are following patterns in their internationalisation to Latin American emerging markets that seems to be a combination of conventional theories (including previous studies on emerging markets-based firms) with idiosyncratic elements.

Keywords China, Latin America, FDI, Emerging markets

Paper type Research paper

Introduction How are Chinese multinational corporations (MNCs) expanding to other emerging markets (EM)? Are they following the same patterns seen in investments in developed economies? Have they developed capabilities strong enough to compete in emerging economies? Answering these questions is relevant, as Latin America (LA) has been one of the main destinations for China’s Outward Foreign Direct Investment (ODI), receiving around 40 per cent of these investments since 2004 and reaching a stock of more than US$70 billion in 2012 which has positioned the country as the third largest foreign investor in the region (Barcena and Rosales, 2010; Fornes and Butt Philip, 2012)[1].

The current issue and full text archive of this journal is available at www.emeraldinsight.com/0955-534X.htm

EBR 26,6

494

European Business Review Vol. 26 No. 6, 2014 pp. 494-513 © Emerald Group Publishing Limited 0955-534X DOI 10.1108/EBR-03-2013-0059

In this context, on the one hand, several publications have argued that the pattern of internationalisation followed by Chinese firms can be framed within existing mainstream theories (Chen et al. (2012); Cui and Jiang (2009); Deng (2007, 2009); Narula and Nguyen (2011)). On the other hand, there are also several publications reporting that Chinese companies in their international expansion are following patterns different from those seen in Western firms (Bhagat et al. (2010); Boisot and Child (1996); Boisot and Meyer (2008); Child and Rodrigues (2005); Deng (2011); Rui and Yip (2008)). The few works on China’s firms in LA seem to follow the latter argument. For example, most investments are favouring Foreign Direct Investments (FDI) over exports (Dyer, 2010; Fernández Jilberto and Hogenboom, 2010; Fornes and Butt-Philip, 2011; Gonzalez-Vicente, 2012) when due to the nature of these investments (mainly multiple sources of value and multiple sources of authority; Sundaram and Black, 1992), mainstream theories would suggest the latter (Dunning, 2003). In any case, Deng (2011, p. 2) found, in a recently published review on Chinese MNCs, that the understanding of Chinese companies’ internationalisation is “far from complete and remains fragmented and disconnected”.

Focussing on the key questions presented above, the paper analyses, first, if the emerging conceptual frameworks developed as a result of the internationalisation of Chinese firms (like those proposed by Boisot and Meyer, 2008; Mathews, 2006; Rugman and Li, 2007; and Rui and Yip, 2008) could be applicable to ODI to Latin American emerging markets; second, if the support from the Chinese Government reported in previous works (as in Buckley et al. (2007); Child and Rodrigues (2005), among others) also applies to investment in emerging markets (in particular LA); third, if the capabilities of Chinese MNCs (as studied by Ge and Ding, 2008; Gonzalez-Vicente, 2012; Rugman and Li, 2007; Williamson and Yin, 2009, among others) are strong enough to successfully compete in emerging markets against local companies (as argued by Fornes and Butt-Philip, 2011).

Overall this article makes three contributions. The analysis of the three points listed above enriches the current debate on the need to develop a theory of Chinese management versus the need to develop a Chinese theory of management (Barney and Zhang, 2009; Child and Rodrigues, 2005; Deng, 2011; Mathews, 2006); this being the main contribution of the article. The paper also contributes by adding evidence on companies different from the ones widely known and studied (like Lenovo Group, Nanjing Automobile, Huawei Technology: Child and Rodrigues, 2005; Rui and Yip, 2008; Haier: Child and Rodrigues, 2005; Palepu et al., 2003, Galanz (Ge and Ding, 2008; Thomson; Shanghai Motors: Rugman and Li, 2007; etc). A third contribution is the study of the characteristics of Chinese companies in environments different from the ones also generally studied in the USA, the EU or Japan. The latter is of particular importance, as it has claimed that those companies that succeed in emerging markets will be in a better position to compete in the global economy (Williamson and Yin, 2009).

The paper is structured as follows. A review of the literature containing the main conceptual framework comes after this section. The Methodology and Sample sections then describe the sample used and the research method followed for the analysis of data. Third, the Theoretical Insights section presents the development of the Research Propositions. Fourth is a Discussion section analysing the results vis-à-vis current literature. The paper concludes with a Summary and Conclusions.

495

Chinese outward investments

Review of the literature Theoretical frameworks After China joined the World Trade Organization (WTO) in 2001, and especially when the first evidence of the internationalisation of its companies appeared, a debate began in the literature on the fit of the Chinese case with existing theories. After all:

China is different from other less developed countries in terms of market size as well as cultural connections and may not fall into a regular LDC [less developed country] category (Makino et al., 2002, p. 412), also it is a much more open economy than most emerging markets.

Within this debate, Deng (2011) found that the mainstream resource-based view (RBV) is increasingly being used to understand Chinese firms’ resources and capabilities. But it is this focus on the RBV which, at the same time, heightens the specific characteristics of Chinese firms (Deng, 2011). In fact, the works based on this framework agree that most of the ownership advantages of Chinese firms are home country specific and network-based (Boisot and Meyer (2008); Rugman and Li (2007); Zhou (2007)), advantages/capabilities that, in general, are different from the firm-specific ones found in incumbent MNCs (Buckley and Casson, 1976; Dunning, 2003).

It is in this context where Child and Rodrigues (2005) proposed the need for a theoretical extension for Chinese companies based on four main differences with the context where mainstream theories have been developed (the companies’ need to catch up, the active role of the Chinese Government, a possible institutional dependence and the Chinese culture with its subsequent relatively higher psychic distance). Others, like Rui and Yip (2008, p. 214), have argued that Chinese ODI may have a strategic intent to achieve specific goals “to offset their competitive weaknesses and leveraging their unit ownership advantages, while making use of institutional incentives and minimizing institutional constraints” In a similar line, Boisot and Meyer (2008, p. 356) said that Chinese firms are going abroad looking for more efficient institutions and, as a result, developed the concept of Institutional Arbitrage, the “exploitation of the differences between different institutional arrangements operating in different jurisdictions”. Buckley et al. (2007, pp. 513-514) added that “for the present, Chinese outward investors clearly present marked contrasts from the conventional model in key aspects”; in other words, these investments have “both a conventional and an idiosyncratic dimension”.

In addition, Mathews (2006) proposed Linkage–Leverage–Learning (LLL), an extension of the OLI paradigm (Dunning, 2003), based on the idea that the “internationalisation from the Asia–Pacific region needs to be reconceived as a “pull” process, as well as involving a push”, and that the internationalisation of these firms is based on a search for new resources to strengthen their competitive position rather than on “the possession of overwhelming domestic assets which can be exploited abroad” (Mathews, 2006, pp. 16-17).

In any case, the relevant question in the context of this research is which one can be applied to the case of LA? The context in LA and China is different from that of mainstream theories. Also, it seems unlikely that Chinese firms would be pursuing institutional arbitrage in a region that is infamous for its institutional frailty (Del Sol and Kogan, 2007; Fornes, 2009; Khanna and Palepu, 2000). Similarly, it is also unlikely that they would have a strategic intent for their investments in LA to become global leaders (unless they are using these markets as a stepping stone, still unlikely). Nevertheless, due to its characteristics, Mathews’s LLL seems to be the most suitable for ODI to LA.

EBR 26,6

496

Support from the government On the other hand, one of the main reported differences in the internationalisation of Chinese MNCs with their Western counterparts has been the support from the Chinese Government. Child and Rodrigues (2005) said that many firms have received financial support and protection from the authorities to reduce their late-coming disadvantage. This support was also visible in the case studies analysed by Rui and Yip (2008) and Rugman and Li (2007). Shoham and Rosenboim (2009) found that the Chinese Government is supporting resource-seeking ODI in Africa as well. Zeng and Williamson (2003) also reported that some companies have access to state-supported research. Buckley et al. (2007) added that the government supports some state-owned enterprises (SOEs) by having capital available at below-market rates and in subsidised or soft loans from banks influenced or owned by the government. Fornes and Butt-Philip (2011) argued that the support from the government could also be seen outside China in the signing of treaties and trade and investment agreements with emerging countries with the aim of improving access to their products (in recent years, China had signed agreements with 32 countries or groups of countries in Africa, Asia, LA, and the southern Pacific, ECLAC, 2011).

However, recent empirical studies have started to question the role and format of this support from the government. For example, Ge and Ding (2008, p. 680) reported that, “as a private enterprise, Galanz still finds it difficult to obtain loans from state-owned banks”. Also, studies on Chinese small and mid-sized enterprises (SMEs) (Cardoza and Fornes, 2011) found that the support from the state in the form of funding seems to be instrumental only in the first stages (local and regional) of Chinese SMEs’ international expansion and that ownership by the state does not seem to play a role in their internationalisation process.

After this analysis of what seems contradictory findings, the need to understand the role of the government in the expansion of Chinese firms to LA becomes evident. The evidence from the first studies in developed economies showed that the government has been pivotal in the internationalisation of its companies; however, studies in recent years (including FDI to emerging economies) have shown that the importance of the government in the process seems to be fading. In the context of this research, a key question is the implications of this support (whether strong or weak) in the strategies of China’s firms in LA.

Chinese firms’ capabilities Finally, a debate has been developing on the strengths of Chinese firms’ capabilities in relation to their international competitors. A decade ago Nolan (2001, p. 187) argued that “the competitive capability of China’s large firms after two decades of reform is still painfully weak in relation to the global giants” mainly in the areas of R&D, marketing ability, development of brands and the restrictions from the authorities. Zeng and Williamson (2003, p. 3) responded to this by pointing out that there is a “new breed of Chinese companies that have already succeeded in capturing some foreign markets” based on domestic strengths, export-orientation, competitive networks and exploitation of technology from government-owned research institutes. Boisot (2004) and Guthrie (2005) added that Chinese companies need to go abroad to acquire competitive advantages and complement their current strengths in the domestic market, and to avoid the disadvantage of operating exclusively in the domestic market. In addition,

497

Chinese outward investments

Rugman and Li’s (2007, p. 71) study of three acquisitions by Chinese MNCs added that they “mainly reflect China’s country-specific advantages (CSAs) rather than FSAs”.

However, recent works (like Bhagat et al., 2010; Boisot and Meyer, 2008; Cardoza and Fornes, 2011; Deng, 2011; Fornes and Butt Philip, 2012; Ge and Ding, 2008; Shoham and Rosenboim, 2009; Williamson and Yin, 2009; Yamakawa et al. (2008); etc.) have started to identify some strong capabilities of Chinese international firms, although most of them are still linked somehow to the domestic environment in which they operate. This may be the result of firms garnering “international experience and improving stock of ownership advantages (both transaction – and asset-type)” which has allowed them “to move towards market-seeking FDI in developed countries” and eventually “become indistinguishable from conventional or mature MNEs” (Narula and Nguyen, 2011, p. 23).

In the context of this research, the question seems to be about the strengths of Chinese firms’ capabilities in relation to those of their counterparts in Latin American emerging markets. It has been suggested that:

[…] although not yet completely developed and consolidated to compete against companies in developed countries, [Chinese firms] have achieved a certain level that allows them to successfully compete in Latin American markets (Fornes and Butt-Philip, 2011).

This is relevant in the context of this work, as “the capabilities to succeed in emerging markets will be decisive in the next round of global competition” (Williamson and Yin, 2009, p. 78).

Methodology and sample The research is based on case studies (Yin, 1994). This methodology was chosen to get a better understanding of the characteristics of Chinese international firms operating in developing contexts and their fit with existing theories (Eisenhardt, 1989; Eisenhardt and Graebner, 2007), the main objectives of this study; this methodology is also better suited to examining subjective features (like vision and reasons to go abroad, reasons to choose an entry mode, perceived strengths and weaknesses, perception of international experience, etc) (Creswell, 2003).

The theoretical sampling (Eisenhardt, 1989; Eisenhardt and Graebner, 2007; Pettigrew, 1990) was built with two SOEs, two private companies, two public companies (no visible state stake, listed in Hong Kong) and a Chamber of Commerce (ChC). To be in the sample, Chinese companies should have invested in LA before 2008 and have an income of at least 5 per cent of total sales from the region (being around 5 per cent the weight of LA in the world economy); around 55 companies fulfil these requirements (Barcena and Rosales, 2010; Dyer and Lapper, 2007; Fornes and Butt Philip, 2012; Santiso, 2007). More details of the companies in the sample can be seen in Table I. The ChC gathers a large group of companies operating in both China and the most important countries in South America and was included to have an outsider’s view of the internationalisation process. Although a relatively small sample, it was designed to offer the option of analytical generalisation (Eisenhardt, 1989).

As can be seen in Table I, two companies are owned by the state, two are public (listed in Hong Kong), and the remaining two are private. All of these firms have total sales of over US$100 million, and the share of sales coming from LA goes from 5 to 20 per cent. They started selling abroad around 14 years ago, on average, and in LA around ten

EBR 26,6

498

Table I. Selected details of the

companies in the sample

C om

pa ny

In du

st ry

SO E

/p ri

va te

T ot

al sa

le s

hi gh

er th

an U

S$ 10

0 m

ill io

n

F ir

st sa

le s

ab ro

ad /

fi rs

t sa

le s

in L

A %

of sa

le s

fr om

L A

F ir

st in

ve st

m en

t in

L A

N o.

of co

un tr

ie s

in L

A

O ri

gi n

of su

bs id

ia ry

’s C

E O

E nt

ry m

od e

C o1

L og

is ti

cs SO

E Y

es 19

99 /2

00 2

5 20

05 n/

a C

hi ne

se JV

C o2

Se rv

ic es

P ri

va te

Y es

19 95

/2 00

2 6

20 02

3 C

hi ne

se JV

C o3

B ea

ut y

P ri

va te

Y es

20 05

/2 00

5 20

20 05

8 B

ra zi

lia n

JV C

o4 A

ut om

ot iv

e SO

E Y

es 20

01 /2

00 7

5 20

08 3

A rg

en ti

ni an

JV C

o5 M

ed ic

in e

H K

lis te

d Y

es 19

97 /2

00 2

9 20

02 6

C hi

ne se

ra is

ed in

L A

JV

C o6

T el

ec om

m un

ic at

io ns

H K

lis te

d Y

es 19

95 /2

00 2

8 20

02 14

C hi

ne se

JV

N o te

s: H

K :H

on g

K on

g; M

ed ic

in e:

C hi

ne se

tr ad

it io

na lm

ed ic

in e;

B ea

ut y:

Si lic

on e

im pl

an ts

m an

uf ac

tu re

r; n/

a: N

ot av

ai la

bl e

499

Chinese outward investments

years ago, on average. Their first investment in LA was around nine years ago, on average.

The data were collected through in-depth interviews, similar to several previous studies on Chinese MNCs (Ge and Ding, 2008; Rui and Yip, 2008), based on the ideas and gaps identified in the review of the literature. Collected data were coded following Glaser and Strauss (1967) and then matched with what has been found in other relevant works and also with data from the ChC. Finally, the findings were analysed through triangulation among the case studies, previous works and secondary data. These processes aimed at providing internal validity.

The interviews were conducted with the chief executive officer (or deputy) of the subsidiary of the Chinese company and with the President of the “Group of Countries” – China ChC (name of the “group of countries” not shown to keep the anonymity of the interviewee). All the interviews were conducted in LA by the main researchers; this avoided any bias in the gathering of data. Secondary data were also collected from other reputable sources like official websites, annual reports, newspaper articles, databases from international organisations, etc. The definition of internationalisation used in this work is that proposed by Mathews (2006, p. 16): “the process of the firm’s becoming integrated in international economic activities”.

The combination of the elements in the methodology, theoretical sampling, case studies, in-depth interviews based on gaps identified in the literature, coding of data, triangulation and pattern matching, were included to strengthen the reliability, internal, construct and external validity to support the findings of the analysis (Gibbert et al., 2008).

Theoretical insights and research propositions Theoretical frameworks As stated above, the analysis of the data started with the assumption that Chinese MNCs are following the LLL framework in their international expansion to LA. Mathews (2006) based the LLL framework on the idea that traditional theories (in particular, internationalisation, strategic impulse to internationalisation, and sources of international advantage) do not necessarily apply as Asia–Pacific companies have distinctive characteristics compared to the incumbents, namely:

• accelerated internationalisation; • organisational innovation; and • strategic innovation.

And in this context:

[…] the considerations that apply to international expansion in the pursuit of resources (and customers) not otherwise available, are quite different from those that apply to expansion which is designed to exploit existing resources (p. 18)[2].

The last column on the right of Table I shows that all the companies in the sample chose a joint venture (JV) as their first entry mode. All the companies said that this provides them with local knowledge (Co6 started with a JV and then bought the local partner’s share) and therefore reduces the risks. The President of the ChC added that this entry mode “guarantees the exploitation of the market”. Companies also said that initially they were invited by the local partner (except Co1) to develop the venture in LA (“the

EBR 26,6

500

local partner acts as a pull for business”, Co2; “the investment abroad was a pull from the local partner”, Co4) as most of these companies were not familiar with operating in a market, which was different from that of China (“most Chinese managers do not have exposure to Western-style markets”, Co4). The six companies in the sample replicated the same model in the countries where they are now present in LA. This strategy created a network of JVs in the region.

In addition, interviewees were asked to rank the five most relevant reasons to invest in LA from a list of 14 options (including “others”). Figure 1 shows the list of options (taken from the literature on internationalisation). All the companies ranked “potential of the market” first; ChC concurred. In second of third positions came “better access to customers” and “possibility to adapt products to the local market”. “Diversification of sources of income”, “development of infrastructure in the host country” and “saturated domestic market” were mentioned by at least one company in either the fourth or fifth place. Their growth plans were very ambitious; they expected to increase their sales in LA by around 30 per cent per year (Co3 100 per cent per year) in the next three years; they said that this is the performance seen in at least the last two years. They anticipated this growth to be organic within the current JVs. Some comments from Co1 exemplify the current situation and prospects:

• “LA is a perfect consumer for Chinese merchandise”; • “There is not enough transport for the products waiting to be shipped [from China

to LA]”; and • “It is not what China wants to sell, it is what LA can actually buy!”

At the time of the interviews, most of the investments in LA were warehouses and distribution facilities. Two companies were building manufacturing facilities in Uruguay, Co3 to adapt its products and Co4 to assemble parts shipped from China, as this country is “the most stable in the Mercosur (Co3)” and also “it provides free access to the big markets in the Mercosur (Co4)”.

The analysis of these responses and comments seems to confirm the initial assumption that the companies in the sample are following the pattern described in Mathews’s (2006) LLL, in particular, a rapid internationalisation looking abroad for

Figure 1. Reasons to decide on

long-term investment in LA (translated into

English for reporting purposes)

501

Chinese outward investments

opportunities to grow pulled by a local partner (rather than a push to exploit domestic assets) through JVs which created a network of interconnected firms. Therefore:

P1. Chinese MNCs go to Latin American markets following the pattern described by LLL.

Support from the government. When asked about the support from the Chinese Government, Co5 replied “how many companies are currently going abroad? It is impossible to support all of them”. Also Co6 replied “there are so many people and companies leaving China that it would be impossible to help all of them”. These comments summarise the feeling (and probably the reality) of all the interviewees: China’s Government does not seem to provide support for their ventures in LA. In fact, ChC said that “most Chinese firms avoid the Chinese embassies in LA as they are mainly political and of little help for business”.

ChC, Co2 and Co6 said that the closest support they have heard of is the possibility of funding Chinese exports (especially heavy goods and machinery for construction and infrastructure development) by the China Development Bank (CDB). Co2 added that “we have been trying to get these credits for a long time but without success” (it seems that the Bank only accepts collateral from the host government, even in private deals, to minimise the risk). These three companies also said that the CDB is analysing private projects to fund in LA, but that they know only a very few small projects that have been approved.

Of particular interest in this section are the two SOEs in the sample. Co1 said that “the expansion to LA is part of the Company’s global strategy with no relation to the Chinese government’s foreign policy and therefore no extra resources to us”. Co4 said that “the support from the government is mainly for natural resources, not for industrial companies like ours, although there is something from provinces [i.e. not central government]”. And Co6, although a public company, said that “the government chose it (along with two other firms) to go abroad and due to this it provided support in the home country by protecting the domestic industry”. As these replies were counterintuitive (especially in the SOEs) the interviewer insisted and tried to go deeper, but the answers continued to be negative.

Interviewees were also asked about the trade and investment agreements signed by China and the host countries. The general feeling was that they did not have any influence in their decision to trade and invest in LA. For example, Co4 said that “these agreements have had an impact in Venezuela, but little effect in the rest of LA”, and Co5 that “they simply do not work!”

The analysis of the responses seems to provide evidence that the companies in the sample are not depending on support from the Chinese Government. Only Co4 hinted at some support from the provincial government (where the parent is located) that does not seem to be relevant in the Latin American venture, and Co6 support in the form of protection in the domestic market. Therefore:

P2. Support from the Chinese Government is not as relevant in the internationalisation of Chinese firms to LA as it has been to developed economies.

Chinese firms’ capabilities. Interviewees were asked to rank what they considered their five strongest capabilities for LA markets from a list of 13 options (plus “others”).

EBR 26,6

502

Figure 2 shows the list of options (taken from the literature on internationalisation). All the answers showed “price” first, and four of them (ChC, Co3, Co5 and Co6) ranked “product” in second position. In third to fifth positions came “access to distribution”, “long-term vision”, “management skills”, “access to distribution”, “access to local government (through the local partner)”, “quality” and “internal R&D”.

On the other hand, they were also asked to rank what they considered their five weakest capabilities for the LA markets from a list of 13 options (plus “others”). The list is shown in Figure 2. “International experience (lack of)” and “(high) psychic distance” came top or second in all the answers (including ChC). Other responses included “language”, “(low) management skills”, “(low recognition of Chinese) brands”, “difficulties to negotiate contracts (not in the list of 13 options)”, “understanding of the local legal system (not in the list of 13 options)” and “low image of Chinese products (not in the list of 13 options)”.

The key to understanding the balance between weaknesses and strengths was provided by Co2 who said that “the Chinese do not know their strengths in the market, the local partner pulls”. This tends to suggest that the weaknesses listed above may be overcome by the experience and knowledge of the local partner who guides the JV to where the market opportunities are. Co6 added that “they are reducing these problems by hiring local people; currently, the ratio is 50/50, but in the future, only directors will come from China”, and Co3 also said that by “hiring managers in LA they avoid the problem of growing salaries of qualified professionals in China”.

Interviewees were also asked about the use or development of ethnic networks (guanxi) as a way to minimise some of these weaknesses as identified in previous research works; in particular, business opportunities, relations with authorities and management of labour in the host market (Chen and Chen, 2004; Lecraw, 1993; Rauch and Trindade, 2002; Yeung and Olds, 2000). The answers from the seven interviewees were negative; they said not to rely on these kinds of networks. However, all the interviewees agreed that the development of local networks (authorities, suppliers, competitors, etc) is key for the success of the venture and that this network is usually provided by the local partner. ChC, Co1 and Co2, added that the Chinese currently in LA do not have the knowledge and capabilities to work in big business.

Figure 2. Capabilities needed in the

Latin American market (translated into English for reporting purposes)

503

Chinese outward investments

The analysis of the responses and comments seems to provide evidence that the companies in the sample have a set of strong capabilities (mainly price, products and access to distribution). These companies have also found a way to overcome their competitive weaknesses via JVs with local partners who identify the market opportunities, act as a pull for the parent firm in China, and minimise the psychic distance. The ability of complementing resources through JVs can also be counted as a competitive capability (within Mathews’s, 2006 Leverage). This combination of strengths (products, prices, access to distribution and ability to manage JVs) seems to be a powerful source of competitive advantage for Chinese firms in Latin American markets. This can be seen in the strong past performance of the companies (mentioned above) along with their ambitious objectives for the next three years. It can also be seen in the high rate of growth of the trade flows from China to LA. Therefore:

P3. Chinese MNCs have developed a set of capabilities that are strong enough to compete successfully in Latin American emerging markets.

The combination of the findings presented so far are also related to other questions posed by previous works on Chinese international firms and the three propositions presented above. In particular, Child and Rodrigues (2005) were concerned about:

• adaptations to the local management and environment, and there seems to be evidence hinting at this in the relation with local partners;

• modifications to their administrative heritage, and there seems to be evidence of this in the reliance on local teams; and

• the potential ability to blend their strengths with those in the host market, and there is evidence of this in what was described as Mathews’s (2006) Leverage.

In addition, and similar to what was found in the case studies analysed by Child and Rodrigues (2005), companies in the sample do not seem to rely on ethnically based social networks as has been the case in earlier works (Cai, 1999; Chen and Chen, 2004; Deng, 2004; Rauch and Trindade, 2002), and also seem to be overcoming the liability of foreignness suggested in earlier works (Cai, 1999; Deng, 2004). Finally, the chosen entry mode (JV) shows a different pattern than that found in other case studies (Child and Rodrigues, 2005; Rugman and Li, 2007; Rui and Yip, 2008). An analysis of these points, comparing studies published some years ago with the data collected for this research, seems to suggest that Chinese companies are developing relatively rapidly a set of capabilities that help them to overcome barriers and challenges usually encountered by MNCs when operating overseas and, in particular, in Latin American emerging markets (like liability of foreignness, reduction of transaction costs, agency problems, etc.). Therefore:

P3a. Chinese MNCs take a second stage in their development in the host market that helps them overcome some of the challenges and barriers of operating in Latin American emerging markets; they seem to be doing this by complementing/ leveraging their strengths with those of local firms.

Discussion Contributions In response to recent calls to enrich the debate on the need to develop a theory of Chinese management versus the need to develop a Chinese theory of management (Barney and

EBR 26,6

504

Zhang, 2009; Boisot and Meyer, 2008; Child and Rodrigues, 2005; Deng, 2011; Mathews, 2006), as well as to identify trends towards and away from globalisation (Buckley, 2002), this article makes the following theoretical and empirical contributions.

Theoretically, the findings show (similarly to previous studies on Chinese ODI to developed economies like, Bhagat et al., 2010; Boisot and Child, 1996; Boisot and Meyer, 2008; Buckley et al., 2007; Child and Rodrigues, 2005; Deng, 2011; Rugman and Li, 2007; Rui and Yip, 2008) that Chinese companies, in their international expansion to Latin American emerging markets, are following patterns that differ from what mainstream theories have observed in Western firms. In particular, the results of the analysis suggest that the companies in the sample follow the pattern described in the LLL framework (Mathews, 2006). This can be seen in companies being pulled to go abroad by partners with whom they are engaged in JVs, acquiring capabilities (like knowledge of international business, local networks and management skills) in the host market, finding opportunities to grow beyond China’s borders, and replicating successfully the same model in different countries.

For the other recently proposed models for the international expansion of Chinese companies, there is little evidence of Institutional Arbitrage (Boisot and Meyer, 2008) in the responses from the interviewees; probably, the only one was the comment from Co3 who said that they are “hiring managers in LA to avoid the problem of growing salaries of qualified professionals in China”, but still this seems to be far from having an intention to go abroad to operate in a different institutional environment. There may be, however, some elements of strategic intent (in particular, “entering new markets, expanding capabilities, building bases of resources and experiences, realizing a firm’s strategic transformation and, ultimately, becoming a global leader”; Rui and Yip, 2008, p. 215) in the comments from interviewees. For example, two of the companies (Co4 and Co6) stated that they are in LA to conquer “first peripheral markets and then the centre as the periphery is easier to access and helps to get experience and volume” (Co6). Nevertheless, the corporate entrepreneurship and acquisition elements do not seem to be present in any of these companies, as they were pulled by an international partner and entered the markets via JVs.

Also, theoretically, the evidence showing that companies in the sample seem to have developed a set of capabilities that are strong enough to compete successfully in LA complements what previous studies have found in emerging economies’ firms. Most of these works suggest that MNCs from emerging economies develop a set of specific advantages needed to cope with a changing environment and the relatively low development of the markets. When crossing the border, these specific advantages can help companies to successfully exploit opportunities in other emerging markets or to create a framework for developing the necessary resources to acquire and also manage assets in other countries (Filatotchev et al., 2003; Fornes and Cardoza, 2009; Guillen, 2000; Hoskisson et al., 2000; Meyer et al., 2009; Peng, 2003; Williamson et al., 2013; Wright et al., 2005).

In the context of this research, companies in the sample have complemented their strengths with those of local firms via JVs. They have not only overcome their weaknesses but also leveraged their strengths. In this case, the strengths in “price” and “product” may be linked to what Williamson and Yin (2009, pp. 80-87) described as “cost innovation capabilities” and “combinative capabilities”, and the ability to deal with the

505

Chinese outward investments

uncertainty of operating in an unknown context and rapidly getting on with a new partner could be categorised as “dynamic capabilities”.

Empirically, the findings of this article join those from recent empirical works (Cardoza and Fornes, 2011; Ge and Ding, 2008; Gonzalez-Vicente, 2012; Williamson and Yin, 2009), providing evidence that the support from the government does not seem to be present in the internationalisation process of the companies focus of the study at least in the format reported in previous studies (Buckley et al., 2007; Child and Rodrigues, 2005; Deng, 2011; Rugman and Li, 2007; Rui and Yip, 2008; Shoham and Rosenboim, 2009). The empirical study of Gonzalez-Vicente (2012, p. 56) on Chinese mining companies in LA shares some of these findings; the support from the Chinese Government is not different from what American companies get in investments in US allied countries or from “the ways international organisations underwrite business environments that are beneficial to the Anglo-American” model of corporate governance.

This may suggest that: • The government supports (or has supported) only a group of tier 1, national

champions or chosen companies and/or industries in their internationalisation process.

• The government supports (or has supported) the internationalisation of companies only to politically or economically strategic markets (like the USA and the EU to acquire capabilities or Africa for natural resources, for example).

• The government supported the first wave of companies going abroad, but as the number of firms grows, this support tends to be less tangible.

• There is a new breed of competitive networks or alliances based on the combination of complementary capabilities (Williamson and Yin, 2009; Zeng and Williamson, 2003) where the support of the government has not been a key element in their internationalisation process.

In any of the cases, this finding questions the role of the government and its impact (if any) in the mid- to long-term and as a consequence in the development of theories behind the internationalisation of Chinese companies. Also, these companies provide evidence that alliances based on the combination of the partners’ strengths are being developed in other emerging markets (LA in this case) where they are gaining market share at the expense of local competitors.

Also, a contribution comes from the combination of factors presented in this section. It suggests that the companies in the sample (with more than ten years of international experience, sales and investments in both developed and developing markets, internationalisation without explicit support from the government, etc.) seem to share some of the characteristics of previous studies on emerging markets-based firms. Early works in this area, such as that of Wells (1983), found that companies from emerging countries successfully compete in other less developed countries based on their advantages developed in the home market. Also, later studies on asset-seeking FDI in LDCs from Asia’s newly industrialised economies showed that companies go to other emerging markets to not only reinforce their price competitiveness but also to strengthen their non-price competitiveness when investing in developed countries (Chen and Chen, 1998).

EBR 26,6

506

All in all, the analysis of the data presented in this paper contributes to extend the understanding of emerging markets-based companies expanding to other emerging markets, in this case, China to LA. Similar to what recent literature has shown, the increasing international experience has allowed the companies in the sample to improve their transaction and asset-type ownership advantages that has led them to successfully compete in the host market (Narula and Nguyen, 2011; Williamson et al., 2013). In the particular case of Chinese companies going to LA, the analysed data have shown that, based on Mathews’s (2006) LLL, firms start their international venture at an earlier stage than their Western counterparts (Boisot and Meyer, 2008) being pulled by a partner in the host country with whom they engage in JVs (Cardoza and Fornes, 2011), mainly to get better access to the market and thus reducing transaction costs, agency problems and liability of foreignness. This process continues in a second stage in which Chinese companies increase their competitive capabilities based on those of the local partner (and also probably on their own cost innovation, combinative and dynamic capabilities). The findings have also shown that the Chinese Government does not play a relevant role in this process. An illustration of this process can be seen in Figure 3.

Limitations A limitation of this work is that the theoretical model was developed based on qualitative data from a small number of companies operating in a wide and diverse regions. Caution should be taken to generalise the conclusions outside the context of this research. In addition, although there were different cases in a sample carefully selected, it is not possible to disregard a selection or survivor bias or other idiosyncratic problems. Finally, although LA is one of the most important emerging markets, it may turn out to be a special case in the internationalisation of Chinese MNCs.

Having said this, measures were taken to strengthen the reliability, internal, construct and external validity of the research. Following a well-established body of literature on case study and qualitative research (Creswell, 2003; Eisenhardt, 1989; Eisenhardt and Graebner, 2007; Gibbert et al., 2008; Glaser and Strauss, 1967; Pettigrew,

Figure 3. Stages in the international

expansion of Chinese MNCS to Latin American

emerging markets

507

Chinese outward investments

1990; Yin, 1994), the findings of this article resulted from an in-depth analysis of case studies with data collected from a carefully selected theoretical sample with data analysed following recognised methods like coding, triangulation and pattern matching (similar to Kotabe et al., 2007). This combination was designed to minimise possible concerns in these areas and, as a consequence, to strengthen the research design and therefore the conclusions of the paper.

Also, measures were taken to minimise possible concerns related to the composition of the sample. The companies were selected for theoretical, not statistical, reasons (Glaser and Strauss, 1967) with the aim to replicate or extend emergent theories (Eisenhardt, 1989; Pettigrew, 1990), with this being one of the main objectives of the research. Second, the three groups of companies (SOE, public and private) were considered to analyse polar types (Pettigrew, 1990) within the population. Third, the inclusion in the sample of the ChC offered an outsider’s view of the phenomena under study, allowed validation of the data from the companies and, in particular, gave the opportunity to triangulate the conclusions. In this sense, the sample was designed to offer the possibility of analytical generalisation as defined by Eisenhardt (1989). In any case, future research may aim to improve this by collecting data from larger samples and, more importantly, by analysing time series.

Future research directions This research leaves some areas awaiting further research. Considering the increasing importance of China in the world’s economy and especially the growth of the China–LA axis of trade and investments (Barcena and Rosales, 2010; Fornes and Butt Philip, 2012), the analysis of these questions will broaden and deepen the understanding of emerging markets-based companies and, as a consequence, push the research agenda on China’s companies. The areas are:

• the possible effects/impact (if any) in the long term of the combination between push and pull to reach emerging markets (Ge and Ding, 2008; Mathews, 2006), especially in comparison with the push-only from the company found in Western firms (Dunning, 2003);

• the sources/drivers/engines of internal capabilities/competitive advantages that lead Chinese MNCs to successfully compete in emerging economies;

• the strategies pursued by Chinese firms to deal with the psychic distance (Johanson and Vahlne, 2009) encountered in other emerging economies, in particular in the management of JVs; and

• the learning process experienced by Chinese MNCs in their operations in emerging economies (and its potential relation with Mathews’s (2006) LLL).

Summary and conclusions How are Chinese MNCs expanding to other EMs? Are they following the same patterns seen in investments in developed economies? Have they developed capabilities strong enough to compete in emerging economies? This article answers these questions by studying Chinese companies with operations in Latin American EMs, and the analysis of the data shows that:

EBR 26,6

508

• these firms are following a pattern similar to that described by Mathews’s LLL; • the government does not play a significant role in the international expansion of

China’s firms to LA; • the capabilities of China’s MNCs are strong enough to compete successfully in LA; and • Chinese companies in LA take a second stage in their development that helps them

overcome some of the challenges and barriers of operating abroad (they seem to be doing this by complementing/leveraging their strengths with those of local firms).

These findings indicate that Chinese companies are following a pattern in their internationalisation to Latin American emerging markets that seems to be a combination of conventional theories with idiosyncratic frameworks. The conventional elements can be seen in the strong internal advantages (mainly in the form of price and products) that are exploiting successfully in the host market along with the private nature of the effort to go abroad (i.e. without support from the government). The idiosyncratic elements can be seen in the need to complement and/or leverage their strengths with local partners and in the chosen entry mode through JVs.

These findings highlight the need to continue the study of the development of companies from emerging markets as the vast majority of academic literature relates to the characteristics of Chinese MNCs and their expansion into developed countries. As the case of LA shows, Chinese firms are currently pursuing market-seeking FDI, and it is highly likely that they are also searching for markets in other areas of the developing world.

Finally, and more broadly, internationalisation of companies from emerging countries going to other emerging markets presents interesting routes for developing the research agenda. In this sense, Buckley (2002) suggested that one of the potential areas for research in the future is the identification of trends towards and away from globalisation, to which Peng (2004) added that future studies need to have a focus on the factors affecting the success and failure of firms in international markets. Given the research presented here, it is possible to argue that the internationalisation of companies from China to other emerging markets is a trend towards globalisation that affects international firms’ performance in ways which have yet to be understood.

Notes 1. Latin America received 50 per cent of Chinese ODI in 2004 (more than the 30 per cent that went

towards Asia), 53 per cent in 2005, 40 per cent in 2006), and the same trend continued in 2008, 2009, 2010 and 2011 (Barcena and Rosales, 2010; Fornes and Butt Philip, 2012; MOFCOM, 2010) Although initially regarded mainly as resource-seeking FDI (IADB, 2004) (where most of the subsequent trade would go towards China as, for example, in the case of investments in Africa Shoham and Rosenboim, 2009), the trade flow from China to LA has grown around 20 times since 1996 (compared to 14 in the other direction) posting a trade surplus for China of around US$30 billion in 2010 from a deficit of US$283 million in 1990 (ECLAC, 2011). These figures suggest that several private Chinese MNCs are also pursuing market-seeking FDI (Dyer, 2010; Fornes and Butt-Philip, 2011) complementing thus the resource-seeking FDI from state-owned enterprises (SOEs) (Armony and Strauss, 2012; Fernández Jilberto and Hogenboom, 2010; Gonzalez-Vicente, 2012).

2. Linkage refers to companies (latecomers or newcomers) that go abroad to acquire advantages externally and, as a consequence of this process, they find opportunities to grow in the global

509

Chinese outward investments

market rather than in the domestic one. This strategy presents higher risks, so companies attempt to minimise them by engaging in JVs in the host market to complement their own resources and strengths. Leverage refers to the ability of these networks to leverage and complement their resources to overcome the barriers erected by the incumbents to delay the entry of competitors. This creates a “worldwide web of interfirm connections” (Mathews, 2006, p. 19). Learning comes as a result of applying repeatedly the linkage and leverage processes which “may result in the firm learning to perform such operations more effectively (organizational learning)” (Mathews, 2006, p. 20).

References Armony, A. and Strauss, J. (2012), “From going out (zou chuqu) to arriving in (desembarco):

constructing a new field of inquiry in China–Latin America interactions”, The China Quarterly, Vol. 209, pp. 1-17.

Barcena, A. and Rosales, O. (2010), La República Popular China y América Latina y el Caribe: Hacia Una Relación Estratégica, Economic Commission for Latin America and the Caribbean, Santiago.

Barney, J. and Zhang, S. (2009), “The future of Chinese management research: a theory of Chinese management versus a Chinese theory of management”, Management and Organization Review, Vol. 5 No. 1, pp. 15-28.

Bhagat, R., McDevitt, A. and McDevitt, I. (2010), “On improving the robustness of asian management theories: theoratical anchors in the era of globalization”, Asia Pacific Journal of Management, Vol. 27 No. 2, pp. 179-192.

Boisot, M. (2004), “Notes on the internationalization of Chinese firms”, Unpublished paper, Open University of Catalonia, Barcelona.

Boisot, M. and Child, J. (1996), “From fiefs to clans and network capitalism: explaining China’s emerging economic order”, Administrative Science Quarterly, Vol. 41 No. 1, pp. 600-628.

Boisot, M. and Meyer, M. (2008), “Which way through the open door? Reflections on the internationalization of Chinese firms”, Management and Organization Review, Vol. 4 No. 3, pp. 349-365.

Buckley, P. (2002), “Is the international business research agenda running out of steam?”, Journal of International Business Studies, Vol. 33 No. 2, pp. 365-374.

Buckley, P. and Casson, M. (1976), The Future of the Multinational Enterprise, Macmillan, London.

Buckley, P., Clegg, J., Cross, A., Liu, X., Voss, H. and Zheng, P. (2007), “The determinants of Chinese outward foreign direct investment”, Journal of International Business Studies, Vol. 38 No. 4, pp. 499-518.

Cai, K. (1999), “Outward foreign direct investment: a novel dimension of China’s integration into the regional and global economy”, The China Quarterly, Vol. 160, pp. 836-880.

Cardoza, G. and Fornes, G. (2011), “The internationalisation of SMEs from China: the case of Ningxia Hui autonomous region”, Asia Pacific Journal of Management, Vol. 28 No. 4, pp. 737-759.

Chen, H. and Chen, T. (1998), “Network linkages and location choice in foreign direct investment”, Journal of International Business Studies, Vol. 29 No. 3, pp. 445-467.

Chen, V., Li, J. and Shapiro, D. (2012), “Sub-National market-supporting institutions and outward FDI: evidence of emerging-market MNEs into developed markets”, paper presented at the Academy of International Business Conference, Washington, DC.

EBR 26,6

510

Chen, X.P. and Chen, C.C. (2004), “On the intricacies of the Chinese guanxi: a process model of guanxi development”, Asia Pacific Journal of Anagement, Vol. 21 No. 3, pp. 305-324.

Child, J. and Rodrigues, S. (2005), “The internationalization of Chinese firms: a case for theoretical extension?”, Management and Organization Review, Vol. 1 No. 3, pp. 381-410.

Creswell, J. (2003), Research Design: Qualitative, Quantitative, and Mixed Methods Approaches, 2nd ed., Sage, London.

Cui, L. and Jiang, F. (2009), “FDI entry mode choice of Chinese firms”, Journal of World Business, Vol. 44 No. 1, pp. 434-444.

Del Sol, P. and Kogan, J. (2007), “Regional competitive advantage based on pioneering economic reforms: the case of chilean FDI”, Journal of International Business Studies, Vol. 38 No. 6, pp. 901-927.

Deng, P. (2004), “Outward investment by Chinese MNCs: motivations and implications”, Business Horizons, Vol. 47 No. 3, pp. 8-16.

Deng, P. (2007), “Investing for strategic resources and its rationale: the case of outward FDI from Chinese companies”, Business Horizons, Vol. 50 No. 1, pp. 71-81.

Deng, P. (2009), “Why do Chinese firms tend to acquire strategic assets in international expansion?”, Journal of World Business, Vol. 44 No. 1, pp. 74-84.

Deng, P. (2011), “The internationalization of Chinese firms: a critical review and future research”, International Journal of Management Reviews, Vol. 14 No. 4.

Dunning, J. (2003), “Some antecedents of internalization theory”, Journal of International Business Studies, Vol. 34 No. 2, pp. 108-115.

Dyer, G. (2010), “World Economy: The China Cycle”, Financial Times, 12 September. Dyer, G. and Lapper, R. (2007), “Pace of investments disappoints Latin America”, Financial Times,

20 December.

ECLAC (2011), Interactive Graphic System of International Trade Data (SIGCI) – International Trade and Integration Division based on SITC Rev. 2, Economic Commission for Latin America and the Caribbean, Santiago.

Eisenhardt, K. (1989), “Building theories from case study research”, Academy of Management Review, Vol. 14 No. 4, pp. 532-550.

Eisenhardt, K. and Graebner, M. (2007), “Theory building from cases: opportunities and challenges”, Academy of Management Journal, Vol. 50 No. 1, pp. 25-32.

Fernández Jilberto, A. and Hogenboom, B. (2010), “Latin America and China: South-South relations in a New Era”, in Fernández Jilberto, A. and Hogenboom, B. (Eds), Latin America Facing China. South-South Relations Beyond the Washington Consensus, Berghahn Books, New York and Oxford.

Filatotchev, I., Wright, M., Hoskisson, R., Uhlenbruck, K. and Tihanyi, L. (2003), “Governance, organizational capabilities, and restructuring in transition economies”, Journal of World Business, Vol. 38 No. 4, pp. 331-347.

Fornes, G. (2009), Foreign Exchange Exposure in Emerging Markets: How Companies Can Minimize it, Palgrave Macmillan, Basingstoke.

Fornes, G. and Butt-Philip, A. (2011), “Chinese MNEs and Latin America: a review”, International Journal of Emerging Markets, Vol. 6 No. 1.

Fornes, G. and Butt Philip, A. (2012), The China-Latin America Axis: Emerging Markets and the Future of Globalisation, Palgrave Macmillan, Basingstoke.

511

Chinese outward investments

Fornes, G. and Cardoza, G. (2009), “Foreign exchange exposure in emerging markets: a study of Spanish companies in Latin America”, International Journal of Emerging Markets, Vol. 4 No. 1, pp. 6-25.

Ge, G. and Ding, D. (2008), “A strategic analysis of sourcing Chinese manufacturers: the case of galanz”, Asia Pacific Journal of Management, Vol. 25 No. 4, pp. 667-683.

Gibbert, M., Ruigrok, W. and Wick, B. (2008), “What passes as a rigorous case study?”, Strategic Management Journal, Vol. 29 No. 13, pp. 1465-1474.

Glaser, B. and Strauss, A. (1967), The Discovery of Grounded Theory: Strategies for Qualitative Research, Aldine, New York, NY.

Gonzalez-Vicente, R. (2012), “Mapping Chinese mining investment in Latin America: politics or market?”, The China Quarterly, Vol. 209 No. 1, pp. 35-58.

Guillen, M.F. (2000), “Business groups in emerging economies: a resource-based view”, Academy of Management Journal, Vol. 43 No. 3, pp. 362-380.

Guthrie, D. (2005), “Organizational learning and productivity: state structure and foreign investment in the rise of the Chinese corporation”, Management and Organization Review, Vol. 1 No. 2, pp. 165-195.

Hoskisson, R.E., Eden, L., Lau, C.M. and Wright, M. (2000), “Strategy in emerging economies”, Academy of Management Journal, Vol. 43 No. 3, pp. 249-267.

IADB (2004), The Emergence of China: Opportunities and Challenges for Latin America and the Caribbean, Inter-American Development Bank, Washington, DC.

Johanson, J. and Vahlne, J. (2009), “The upssala internationalization process model revisited: from liability of foreigness to liability of outsidership”, Journal of International Business Studies, Vol. 40 No. 9, pp. 1411-1431.

Khanna, T. and Palepu, K. (2000), “The future of business groups in emerging markets: long-run evidence from Chile”, Academy of Management Journal, Vol. 43 No. 3, pp. 268-285.

Kotabe, M., Parente, R. and Murray, J. (2007), “Antecedents and outcomes of modular production in the Brazilian automobile industry: a grounded theory approach”, Journal of International Business Studies, Vol. 38 No. 1, pp. 84-106.

Lecraw, D. (1993), “Outward direct investment by Indonesian firms: motivation and effects”, Journal of International Business Studies, Vol. 24 No. 3, pp. 589-600.

Makino, S., Chung-Ming, L. and Rhy-Song, Y. (2002), “Asset-exploitation versus asset-seeking: implications for location choice of foreign direct investment from newly industrialized economies”, Journal of International Business Studies, Vol. 33 No. 3, pp. 403-421.

Mathews, J. (2006), “Dragon multinationals: new players in 21st century globalization”, Asia Pacific Journal of Management, Vol. 23 No. 1, pp. 5-27.

Meyer, K., Estrin, S., Kumar Bhaumik, S. and Peng, M. (2009), “Institutions, resources, and entry strategies in emerging economies”, Strategic Management Journal, Vol. 30 No. 1, pp. 61-80.

MOFCOM (2010), “Statistical bulletin of China’s outward foreign direct investment”, Ministry of Commerce the People’s Republic of China, Beijing.

Narula, R. and Nguyen, Q. (2011), “Emerging country MNEs and the role of home countries: separating fact from irrational expectations”, UNU-MERIT Working Papers Series, 2011-021, available at: http://opennet.unu.edu/calendar/?go�event.page&id�3915

Nolan, P. (2001), China and the Global Economy, Palgrave, Basingstoke. Palepu, K., Khanna, T. and Vargas, I. (2003), “Haier: taking a Chinese company global”, Harvard

Business School Cases, 9-706-401, Boston, MA.

EBR 26,6

512

Peng, M. (2003), “Institutional transitions and strategic choices”, Academy of Management Review, Vol. 28 No. 2, pp. 275-296.

Peng, M. (2004), “Identifying the big question in international business research”, Journal of International Business Studies, Vol. 35 No. 2, pp. 99-108.

Pettigrew, A. (1990), “Longitudinal field research on change: theory and practice”, Organization Science, Vol. 1 No. 3, pp. 267-292.

Rauch, J. and Trindade, V. (2002), “Ethnic Chinese networks in international trade”, The Review of Economics and Statistics, Vol. 84 No. 1, pp. 116-130.

Rugman, A. and Li, J. (2007), “Will China’s multinationals succeed globally or regionally?”, European Management Journal, Vol. 25 No. 5, pp. 333-343.

Rui, H. and Yip, G. (2008), “Foreign acquisitions by Chinese firms: a strategic intent perspective”, Journal of World Business, Vol. 43 No. 2, pp. 213-226.

Santiso, J. (Ed) (2007), The Visible Hand of China in Latin America, OECD Development Centre Studies, Paris.

Shoham, A. and Rosenboim, M. (2009), “China’s new approach to ODI in Africa: a model for a government seeking natural resources”, in Alon, I., Chang, J., Fetscherin, M. and Lattemann, C. (Eds), China Rules: Globalization and Political Transformation, Palgrave Macmillan, Basingstoke and New York.

Sundaram, A. and Black, S. (1992), “The environment and internal organization of multinational enterprises”, Academy of Management Review, Vol. 17 No. 4, pp. 729-757.

Wells, L. (1983), Third World Multinationals: The Rise of Foreign Direct Investment from Developing Countries, MIT Press, Cambridge, MA.

Williamson, P. and Yin, E. (2009), “Racing with the Chinese dragons”, in Alon, I., Chang, J., Fetscherin, M. and Lattemann, C. (Eds), China Rules: Globalization and Political Transformation, Palgrave Macmillan, Basingstoke and New York, pp. 69-100.

Williamson, P., Ramamurti, R., Fleury, A. and Leme Fleury, M.T. (Eds) (2013), The Competitive Advantage of Emerging Market Multinationals, Cambridge University Press, Cambridge.

Wright, M., Filatotchev, I., Hoskisson, R.E. and Peng, M.W. (2005), “Strategy research in emerging economies: challenging the conventional wisdom”, Journal of Management Studies, Vol. 42 No. 1, pp. 1-33.

Yamakawa, Y., Peng, M. and Deeds, D. (2008), “What drives new ventures to internationalize from emerging to developed economies?”, Entrepreneurship Theory and Practice, Vol. 32 No. 1, pp. 59-82.

Yeung, H. and Olds, K. (Eds) (2000), Globalization of Chinese Business Firms, St Martin’s Press, New York, NY.

Yin, R. (1994), Case Study Research: Design and Methods, Sage, Beverly Hills, CA. Zeng, M. and Williamson, J. (2003), “The hidden dragons”, Harvard Business Review, Vol. 81

No. 10, pp. 92-99. Zhou, L. (2007), “The effects of entrepreneurial proclivity and foreign market knowledge on early

internationalization”, Journal of World Business, Vol. 42 No. 3, pp. 281-293.

Corresponding author Gaston Fornes can be contacted at: [email protected]

To purchase reprints of this article please e-mail: [email protected] Or visit our web site for further details: www.emeraldinsight.com/reprints

513

Chinese outward investments

Reproduced with permission of the copyright owner. Further reproduction prohibited without permission.