IDEAS home Printed from https://ideas.repec.org/a/taf/jocebs/v3y2005i2p111-131.html
   My bibliography  Save this article

The Strategy of foreign-invested manufacturing enterprises in China: Export-orientated and market-orientated FDI revisited

Author

Listed:
  • Peter Buckley
  • Chen Meng

Abstract

This paper examines export-orientated and market-orientated foreign direct investment (FDI) in China's manufacturing industry. Based on Fung's (1995) survey estimation of China's market-orientated FDI in 1992 and China's Third National Industrial Census in 1995, we quantify the proportion of market-orientated FDI in China 1992-2002. By combining and verifying various data sources, our estimation shows that market-orientated FDI accounts for the majority of China's total inward FDI in manufacturing industry and has grown faster than export-orientated FDI over the period 1992-2002. Our industry level analysis suggests that Overseas Chinese investors are more export-orientated than Western investors. The study suggests that many inward investors follow a dual market strategy. The coexistence of export-orientated and Chinese domestic market-orientated FDI is a reflection of the flexibility of MNEs to adjust and adapt ownership attributes to the local market context. The study offers insights into the evolutionary development path taken by foreign-invested manufacturing enterprises in China.

Suggested Citation

  • Peter Buckley & Chen Meng, 2005. "The Strategy of foreign-invested manufacturing enterprises in China: Export-orientated and market-orientated FDI revisited," Journal of Chinese Economic and Business Studies, Taylor & Francis Journals, vol. 3(2), pages 111-131.
    • Handle: RePEc:taf:jocebs:v:3:y:2005:i:2:p:111-131
    DOI: 10.1080/14765280500120112
    as

    Download full text from publisher

    File URL: http://www.tandfonline.com/doi/abs/10.1080/14765280500120112
    Download Restriction: Access to full text is restricted to subscribers.
    File URL: https://libkey.io/10.1080/14765280500120112?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    As the access to this document is restricted, you may want to search for a different version of it.

    References listed on IDEAS

    as
    1. Zhang, Qing & Felmingham, Bruce, 2001. "The relationship between inward direct foreign investment and China's provincial export trade," China Economic Review, Elsevier, vol. 12(1), pages 82-99.
    2. Robert J Rolfe & David A Ricks & Martha M Pointer & Mark McCarthy, 1993. "Determinants of FDI Incentive Preferences of MNEs," Journal of International Business Studies, Palgrave Macmillan;Academy of International Business, vol. 24(2), pages 335-355, June.
    3. Haishun Sun & Phillip Hone & Hristos Doucouliago, 1999. "Economic openness and technical efficiency: A case study of Chinese manufacturing industries," The Economics of Transition, The European Bank for Reconstruction and Development, vol. 7(3), pages 615-636, November.
    4. Yingqi Wei & Xiaming Liu & David Parker & Kirit Vaidya, 1999. "The Regional Distribution of Foreign Direct Investment in China," Regional Studies, Taylor & Francis Journals, vol. 33(9), pages 857-867.
    5. Peter J. Buckley & Mark Casson, 2010. "Models of the Multinational Enterprise," Palgrave Macmillan Books, in: The Multinational Enterprise Revisited, chapter 7, pages 147-176, Palgrave Macmillan.
    6. Frederick W Schroath & Michael Y Hu & Haiyang Chen, 1993. "Country-of-origin Effects of Foreign Investments in the People's Republic of China," Journal of International Business Studies, Palgrave Macmillan;Academy of International Business, vol. 24(2), pages 277-290, June.
    7. Zhang, Kevin Honglin & Markusen, James R., 1999. "Vertical multinationals and host-country characteristics," Journal of Development Economics, Elsevier, vol. 59(2), pages 233-252, August.
    8. Hein, Simeon, 1992. "Trade Strategy and the Dependency Hypothesis: A Comparison of Policy, Foreign Investment, and Economic Growth in Latin America and East Asia," Economic Development and Cultural Change, University of Chicago Press, vol. 40(3), pages 495-521, April.
    9. Douglas P Woodward & Robert J Rolfe, 1993. "The Location of Export-Oriented Foreign Direct Investment in the Caribbean Basin," Journal of International Business Studies, Palgrave Macmillan;Academy of International Business, vol. 24(1), pages 121-144, March.
    10. Cheng, Leonard K. & Kwan, Yum K., 2000. "What are the determinants of the location of foreign direct investment? The Chinese experience," Journal of International Economics, Elsevier, vol. 51(2), pages 379-400, August.
    11. Sumantra Ghoshal, 1987. "Global strategy: An organizing framework," Strategic Management Journal, Wiley Blackwell, vol. 8(5), pages 425-440, September.
    12. Lucas, Robert E. B., 1993. "On the determinants of direct foreign investment: Evidence from East and Southeast Asia," World Development, Elsevier, vol. 21(3), pages 391-406, March.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Innwon Park & Soonchan Park, 2015. "Modes of Foreign Direct Investment and Patterns of Trade: An Alternative Empirical Approach," The World Economy, Wiley Blackwell, vol. 38(8), pages 1225-1245, August.
    2. Deborah L. Swenson, 2008. "Multinationals and the creation of Chinese trade linkages," Canadian Journal of Economics/Revue canadienne d'économique, John Wiley & Sons, vol. 41(2), pages 596-618, May.
    3. Taxiarchis Delis & Dimitrios Kyrkilis, 2017. "Locational Concentration of Foreign Direct Investment in China: a Cluster Factor-Based Analysis," Journal of the Knowledge Economy, Springer;Portland International Center for Management of Engineering and Technology (PICMET), vol. 8(4), pages 1115-1132, December.
    4. Martijn Boermans & Hein Roelfsema & Yi Zhang, 2011. "Regional determinants of FDI in China: a factor-based approach," Journal of Chinese Economic and Business Studies, Taylor & Francis Journals, vol. 9(1), pages 23-42.
    5. James Laurenceson & Abby Kamalankanthan, "undated". "How important is foreign capital to income growth in China and India?," EAERG Discussion Paper Series 0405, School of Economics, University of Queensland, Australia.
    6. Chengqi Wang & Jeremy Clegg & Mario Kafouros, 2009. "Country-of-Origin Effects of Foreign Direct Investment," Management International Review, Springer, vol. 49(2), pages 179-198, April.
    7. Cuihong Yang & Erik Dietzenbacher & Jiansuo Pei & Xikang Chen & Kunfu Zhu & Zhipeng Tang, 2015. "Processing Trade Biases The Measurement Of Vertical Specialization In China," Economic Systems Research, Taylor & Francis Journals, vol. 27(1), pages 60-76, March.

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Giner, Jose Miguel & Giner, Graciela, 2004. "An interpretative model of foreign direct investment in China: An economic policy approach," China Economic Review, Elsevier, vol. 15(3), pages 268-280.
    2. Shaoming Cheng, 2008. "How can western China attract FDI? A case of Japanese investment," The Annals of Regional Science, Springer;Western Regional Science Association, vol. 42(2), pages 357-374, June.
    3. Salike, Nimesh, 2016. "Role of human capital on regional distribution of FDI in China: New evidences," China Economic Review, Elsevier, vol. 37(C), pages 66-84.
    4. Bailey, Nicholas, 2018. "Exploring the relationship between institutional factors and FDI attractiveness: A meta-analytic review," International Business Review, Elsevier, vol. 27(1), pages 139-148.
    5. Isabel Faeth, 2009. "Determinants Of Foreign Direct Investment – A Tale Of Nine Theoretical Models," Journal of Economic Surveys, Wiley Blackwell, vol. 23(1), pages 165-196, February.
    6. Shaoming Cheng, 2007. "Structure of Firm Location Choices: An Examination of Japanese Greenfield Investment in China," Asian Economic Journal, East Asian Economic Association, vol. 21(1), pages 47-73, March.
    7. Paul, Justin & Feliciano-Cestero, María M., 2021. "Five decades of research on foreign direct investment by MNEs: An overview and research agenda," Journal of Business Research, Elsevier, vol. 124(C), pages 800-812.
    8. Zhang, Kevin Honglin & Song, Shunfeng, 2001. "Promoting exports: the role of inward FDI in China," China Economic Review, Elsevier, vol. 11(4), pages 385-396.
    9. repec:rre:publsh:v:38:y:2008:i:3:p:395-415 is not listed on IDEAS
    10. Rajdeep Grewal & Murali Chandrashekaran & F. Robert Dwyer, 2008. "Navigating Local Environments with Global Strategies: A Contingency Model of Multinational Subsidiary Performance," Marketing Science, INFORMS, vol. 27(5), pages 886-902, 09-10.
    11. Mary-Françoise RENARD & Nasser ARY TANIMOUNE, 2005. "FDI convergence and Spatial Dependence between Chinese Provinces," Working Papers 200531, CERDI.
    12. Saleh, Ali Salman & Anh Nguyen, Thi Lan & Vinen, Denis & Safari, Arsalan, 2017. "A new theoretical framework to assess Multinational Corporations’ motivation for Foreign Direct Investment: A case study on Vietnamese service industries," Research in International Business and Finance, Elsevier, vol. 42(C), pages 630-644.
    13. Zhang, Tingting (Grace) & You, Yu, 2021. "Scale or efficiency? Performance shortfall and engagement in production activities of foreign subsidiaries in China," Journal of International Management, Elsevier, vol. 27(1).
    14. Shima’a Hanafy, 2014. "Determinants of FDI Location in Egypt: Empirical Analysis Using Governorate Panel Data," Working Papers 875, Economic Research Forum, revised Nov 2014.
    15. Fabienne Boudier‐Bensebaa, 2005. "Agglomeration economies and location choice: Foreign direct investment in Hungary," The Economics of Transition, The European Bank for Reconstruction and Development, vol. 13(4), pages 605-628, October.
    16. Esiyok, Bulent, 2011. "Determinants of foreign direct investment in Turkey: a panel study approach," MPRA Paper 36568, University Library of Munich, Germany.
    17. Yuqing Xing, 2008. "FDI in China: Facts and Impacts on China and the World Economy," Working Papers EMS_2008_03, Research Institute, International University of Japan.
    18. Owen C. H. Ho, 2004. "Determinants of Foreign Direct Investment in China: A Sectoral Analysis," Economics Discussion / Working Papers 04-18, The University of Western Australia, Department of Economics.
    19. Michał Brzozowski, 2013. "Gender Equality as the Determinant of FDI Flows to Central European Countries," Ekonomia journal, Faculty of Economic Sciences, University of Warsaw, vol. 33.
    20. Erdey, László, 2004. "A működőtőke-áramlás a telephelyválasztás elméletének tükrében [The flow of operating capital in the light of the theory of location choice]," Közgazdasági Szemle (Economic Review - monthly of the Hungarian Academy of Sciences), Közgazdasági Szemle Alapítvány (Economic Review Foundation), vol. 0(5), pages 472-494.
    21. Graf, Michael & Mudambi, Susan M., 2005. "The outsourcing of IT-enabled business processes: A conceptual model of the location decision," Journal of International Management, Elsevier, vol. 11(2), pages 253-268, June.

    More about this item

    Keywords

    Export-orientated FDI; market-orientated FDI; foreign-invested enterprises (FIEs); China; Jel Codes: L1; M21;
    All these keywords.

    JEL classification:

    • L1 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance
    • M21 - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics - - Business Economics - - - Business Economics

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:taf:jocebs:v:3:y:2005:i:2:p:111-131. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Chris Longhurst (email available below). General contact details of provider: http://www.tandfonline.com/RCEA20 .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.