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Benefitting from Chinese FDI? An assessment of vertical linkages with Vietnamese manufacturing firms

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  • Kubny, Julia
  • Voss, Hinrich

Abstract

Previous studies have suggested that foreign direct investment between emerging economies can benefit domestic firms more than investments from industrialised countries because of a lower technology gap and more appropriate technology being transferred. Empirical evidence for this is scarce. Addressing this gap, we investigate the impact of Chinese direct investment on local firms through vertical linkages in manufacturing industries of Vietnam. We find that the share of local sourcing of Chinese firms is similar to other foreign investors while their forward linkages are more extensive. Although this supports assertions about the benefits of investment by emerging market firms, the overall potential gains seem limited. This is due to little value-adding interaction with local firms, the local sourcing of low-technology goods, and the sparse provision of training and financial support.

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  • Kubny, Julia & Voss, Hinrich, 2014. "Benefitting from Chinese FDI? An assessment of vertical linkages with Vietnamese manufacturing firms," International Business Review, Elsevier, vol. 23(4), pages 731-740.
    • Handle: RePEc:eee:iburev:v:23:y:2014:i:4:p:731-740
    DOI: 10.1016/j.ibusrev.2013.11.002
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    2. Nguyen, Hong-Kong T. & Vuong, Quan-Hoang & Ho, Tung Manh & Vuong, Thu-Trang, 2018. "The “same bed, different dreams” of Vietnam and China: how (mis)trust could make or break it," OSF Preprints khtn5, Center for Open Science.
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    6. Buckley, Peter J & Cui, Lin & Chen, Liang & Li, Yi & Choi, Yoona, 2023. "Following their predecessors’ journey? A review of EMNE studies and avenues for interdisciplinary inquiry," Journal of World Business, Elsevier, vol. 58(2).
    7. Ha, Yoo Jung & Giroud, Axèle, 2015. "Competence-creating subsidiaries and FDI technology spillovers," International Business Review, Elsevier, vol. 24(4), pages 605-614.
    8. David Sedik & Fujin Yi & Richard T. Gudaj, 2020. "Implications of Chinese Farmers in the Russian Far East," American Journal of Economics and Sociology, Wiley Blackwell, vol. 79(5), pages 1615-1622, November.
    9. Sato, Akiko & Panibratov, Andrei, 2023. "Causal mechanisms of COVID-19 disruptive effects on liability of foreignness and the emergence of new firm-specific advantages," International Business Review, Elsevier, vol. 32(4).
    10. Shimaa Elkomy & Hilary Clistina Ingham & Robert Allan Read, 2018. "Heterogeneous Sectoral Growth Effects of FDI in Egypt," Working Papers 238221684, Lancaster University Management School, Economics Department.
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