Korea Trade Review (무역학회지)

Korea Trade Research Association (한국무역학회)
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The Differences in the Selection of Outward FDI Locations between State- and Privately Owned Enterprises of China: Focusing on the Effects of Host Country Factors

중국 국유기업과 민간기업 간 해외직접투자 입지 차이 분석: 현지국 요인의 영향을 중심으로

  • Ra, Wonchan (Division of Global Business & Technology Hankuk University of Foreign Studies) ;
  • Wu, Mengqiu (Department of International Business Graduate School, Hankuk University of Foreign Studies)
  • 나원찬 (한국외국어대학교 Global Business & Technology/일반대학원 국제경영학과) ;
  • 오몽추 (한국외국어대학교 일반대학원 국제경영학과)
  • Received : 2019.12.08
  • Accepted : 2019.12.16
  • Published : 2019.12.31
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Abstract

In recent years, Chinese firms have explosively increased outward foreign direct investment (oFDI). While state-owned enterprises (SOEs) are still dominant in Chinese oFDI, privately-owned enterprises (POEs) are also accelerating their internationalization. These two types of Chinese firms differ in their behavior regarding oFDI. The objective of this paper is to analyze the differences in the choice of oFDI locations between Chinese SOEs and POEs by considering host country factors. By integrating the literature on Chinese firms' oFDI and on FDI locations, we developed six hypotheses concerning how host country factors affect their choice of location. We tested our hypotheses by conducting multiple regression analysis with recent secondary data on 413 Chinese MNEs in 88 countries between 2005 and 2016. The results of the test show that in selecting oFDI locations, Chinese SOEs invest relatively more in countries with richer natural resources, more abundant strategic assets, less production efficiency, higher political risk, and lower institutional quality compared with Chinese POEs. It is our hope that the empirical results of this paper will contribute to research on Chinese oFDI.

Keywords

Acknowledgement

This paper was supported by the 2019 research fund of Hankuk University of Foreign Studies.

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