Wooing the new Chinese businesses: five short-term policies to attract direct investment

• Published in: The Journal of business strategy Vol. 37; no. 5; pp. 3 - 11
• Main Authors: Ramasamy, Bala, Yeung, Matthew
• Format: Journal Article
• Language: English
• Published: Boston Emerald Group Publishing Limited 19-09-2016; Emerald Group Publishing, Ltd
• Subjects: Analysis; Annual reports; Company business management; Data collection; Decision making; Foreign direct investment; Foreign investment; Foreign investments; Globalization; Industrialized nations; Internationalism; Management; Natural resources; Studies; Tax havens; Tax incentives; Tax rates; Trade agreements; Trends; China; Hong Kong China; International business strategies; Economic relationship; Outward FDI; Location decisions; Political relationship; China
• ISSN: 0275-6668; 2052-1197
• DOI: 10.1108/JBS-11-2015-0117

Purpose
The purpose of this paper is to identify location factors that Chinese managers look for when making internationalization decisions and how the factors stack up in perceived importance. Over the past ten years, Chinese enterprises have become more multi-national in nature. China’s outward foreign direct investment (FDI) has been growing at a phenomenal rate. In 2012, China became the third largest investor, after the USA and Japan; and the largest investor among developing countries. How can host governments attract more of this Chinese capital? What are some short- to medium-term policies that host governments can initiate to make their respective nations attractive to Chinese companies?
Design/methodology/approach
The authors consider these questions by using a best-worst choice exercise among 114 senior corporate decision makers of Chinese companies who have or are planning to globalize. We rank 16 most common determinants that influence FDI location choice and evaluate their degree of importance.
Findings
The authors propose five “low hanging fruits” that policy makers should consider that could ensure their countries come within the radar of Chinese multi-nationals. These include promoting a clean and efficient business environment and strengthening/establishing political and economic relationships with China.
Originality/value
The originality of this study lies in the methodology of the study that forces respondents to make a trade-off in their decisions, which in a way is closer to reality. The respondents are also actual decision makers in their companies with regards to international investment decisions.