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Chinese Returnees and High-tech Sector Outward FDI: The Case of Changzhou

Author

Listed:
  • Chen, Zhao

    () (Fudan University, China)

  • Fang, Tony

    () (Memorial University of Newfoundland)

Abstract

The rapid growth and high levels of internationalization by Chinese firms, raise a natural interest in the study of the factors which have led the notable international presence of Chinese firms. To contribute to this effort, we use data from the 2008-10 survey of China's High-tech firms, conducted by the Chinese Ministry of Science and Technology, to estimate the determinants of Chinese firm outward FDI (OFDI). In our analysis, the primary independent variables include high-tech intensity, human capital acquisition, and institutional factors. We have also controlled for various firm characteristics such as firm age, total value of fixed assets, and firm ownership. Estimation from our fixed-effects model uncovers a number interesting patterns in OFDI outcomes. Most notable, among the significant determinants of OFDI, the number of Chinese returnees employed by a firm seems to be more important than tax reduction policies. Further, the effects of the Chinese returnees have a stronger effect on non state-controlled firms than they do for state-controlled firms. This finding is intuitive, since the Chinese returnees who were trained in the West have an understanding of product markets, labour markets, financial markets, language and business culture, and trade laws in both China and the West. Their unique skill sets and knowledge appear to serve as an important catalysts in the growth of OFDI and internationalization by Chinese firms.

Suggested Citation

  • Chen, Zhao & Fang, Tony, 2016. "Chinese Returnees and High-tech Sector Outward FDI: The Case of Changzhou," IZA Discussion Papers 10045, Institute of Labor Economics (IZA).
  • Handle: RePEc:iza:izadps:dp10045
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    References listed on IDEAS

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    1. Randall Morck & Bernard Yeung & Minyuan Zhao, 2008. "Perspectives on China's outward foreign direct investment," Journal of International Business Studies, Palgrave Macmillan;Academy of International Business, vol. 39(3), pages 337-350, April.
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    1. repec:tpr:asiaec:v:16:y:2017:i:2:p:55-76 is not listed on IDEAS
    2. repec:eee:iburev:v:26:y:2017:i:3:p:579-591 is not listed on IDEAS

    More about this item

    Keywords

    Chinese firm internationalization; OFDI; panel data;

    JEL classification:

    • F21 - International Economics - - International Factor Movements and International Business - - - International Investment; Long-Term Capital Movements
    • M16 - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics - - Business Administration - - - International Business Administration
    • F23 - International Economics - - International Factor Movements and International Business - - - Multinational Firms; International Business

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