The Outward Investment of China: Causes and Consequences

This chapter focuses on a key issue for the global economy, Chinese economic development by examining a range of key indicators. First, it is clear that China is becoming very active in the area of research and development, as China acquires access to R&D from several sources through its R&D imports. Many countries around the world compete in supplying R&D products to developing countries, and China is easily profiting from these imports. Last year alone, China obtained about US $60 billion in direct foreign investment. Moreover, China also develops its own R&D through research institutes and academies. Therefore, the growth of R&D in China is very rapid. China also enjoys a secure standing in marketing management, because it produces many products which are supplied on both local and international markets. China is currently developing its range of brand names to give it brand recognition in domestic and international markets using a dual-track approach. Where it can it has developed indigenous brands but where it would be difficult for China to compete with a pre-existing brand it has sought to acquire selected pre-existing brand names. An example of this is TCL, one of the greatest economic giants in China. TCL acquired Thomson from France and uses its well-known brands such as RCA. Similarly, one of the famous computer producers in China, Lenovo, recently acquired IBM’s computer division and can use its trusted name for at least five consecutive years. Thus, this strategy of brand name promotion has lead to an internationalisation of Chinese brand names and international access via the purchase of international brands.