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Rationale of internationalization of China's national oil companies: seeking natural resources, strategic assets or sectoral specialization?

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  • Hongyi Lai
  • Sarah O'Hara
  • Karolina Wysoczanska

Abstract

The bulk of the existing literature emphasized that China's companies sought strategic assets (technology, brands and access to markets) through internationalization in order to overcome latecomers' comparative disadvantage, while some studies suggested that these firms went after natural resources to address China's rising oil imports. The third argument (which we coin the 'sectoral strength' hypothesis) suggested that the upstream firms in extractive business would seek natural resources, whereas downstream ones would seek strategic assets. In this study, we examine the rationale of main overseas investment deals ('going out') of China's two largest national oil companies during 2002-2010 which were also China's top two non-financial firms with the largest outward investment stocks during 2004-2010. We conclude that these deals can be best explained by the 'sectoral specialisation' hypothesis supplemented with a consideration for strategic assets.

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  • Hongyi Lai & Sarah O'Hara & Karolina Wysoczanska, 2015. "Rationale of internationalization of China's national oil companies: seeking natural resources, strategic assets or sectoral specialization?," Asia Pacific Business Review, Taylor & Francis Journals, vol. 21(1), pages 77-95, January.
    • Handle: RePEc:taf:apbizr:v:21:y:2015:i:1:p:77-95
    DOI: 10.1080/13602381.2014.939896
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    References listed on IDEAS

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    1. John H. Dunning & Sarianna M. Lundan, 2008. "Multinational Enterprises and the Global Economy, Second Edition," Books, Edward Elgar Publishing, number 3215.
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    Cited by:

    1. Cuervo-Cazurra, Alvaro & Li, Cheng, 2021. "State ownership and internationalization: The advantage and disadvantage of stateness," Journal of World Business, Elsevier, vol. 56(1).
    2. Hongyi Lai & Malcolm Warner, 2015. "Transformation of China's energy sector: trends and challenges," Asia Pacific Business Review, Taylor & Francis Journals, vol. 21(1), pages 147-153, January.
    3. Xie, En & Reddy, K.S. & Liang, Jie, 2017. "Country-specific determinants of cross-border mergers and acquisitions: A comprehensive review and future research directions," Journal of World Business, Elsevier, vol. 52(2), pages 127-183.
    4. Panicker, Vidya Sukumara & Upadhyayula, Rajesh Srinivas & Sivakumar, Sandeep, 2022. "Internationalization of hybrid state-owned enterprises from emerging markets: Institutional investors as enablers," Journal of Business Research, Elsevier, vol. 151(C), pages 409-422.
    5. Alvaro Cuervo-Cazurra & Anna Grosman & Geoffrey T. Wood, 2023. "Cross-country variations in sovereign wealth funds’ transparency," Journal of International Business Policy, Palgrave Macmillan, vol. 6(3), pages 306-329, September.
    6. Reddy, K.S. & Xie, En, 2017. "Cross-border mergers and acquisitions by oil and gas multinational enterprises: Geography-based view of energy strategy," Renewable and Sustainable Energy Reviews, Elsevier, vol. 72(C), pages 961-980.

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