New Horizons in International Business series
Chapter 1: Introduction
This chapter is concerned with delivering the rationale for researching Chinese outward direct investment (OFDI). In so doing, vaguely understood patterns of Chinese OFDI and international strategies by Chinese firms are identified and the research objectives expressed. It is also highlighted that the role played by the Chinese government in effecting Chinese OFDI may be underplayed in current research. This chapter also provides terms and definitions used throughout the book to avoid any misinterpretations. 1.1 RATIONALE OF THE RESEARCH Since the instigation of the ‘Open Door’ policies (gaige kaifang, ) in 1978, China has experienced three decades of considerable domestic economic and institutional reform. These reforms have been directed towards changing the domestic industrial structure and increasing the degree of integration of China’s economy and its businesses into the global economy. China is thus well known and researched as a host country for foreign direct investment (FDI) (for example, Clegg et al. 1996; Cross and Tan 2004; Branstetter and Lardy 2006; Buckley et al. 2007a). Less well understood, however, is China’s evolving role as a source country of FDI and the determinants of China’s outbound foreign direct investment (OFDI). Until 1979, OFDI from China’s autarkic economy was modest. But since then, OFDI flows have steadily increased. A first peak was reached just after Deng Xiaoping, de facto Paramount Leader of China, revived the economic liberalisation and reform process in 1992 and annual outflows jumped to USD 4.4bn (see Figure 1.1). Outflow levels remained on a relatively high level for an emerging...