Research Handbook on the Globalization of Chinese Firms
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Research Handbook on the Globalization of Chinese Firms

Edited by Craig C. Julian, Zafar U. Ahmed and Junqian Xu

This comprehensive research Handbook encompasses an expansive range of perspectives on the globalization process of Chinese firms. Eminent global scholars provide contributions on a variety of topics, including: • industrial innovation; • technological innovation and learning; • the performance of Chinese international joint ventures,; • the global consumer; • Foreign Direct Investment (FDI) including barriers to FDI and FDI in China’s hinterland areas; • the globalization of Chinese business practices in Africa; • the Human Resource Management Transfer Process; • Corporate Information Disclosure in China’s Stock Market; and • the home employment effect.
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Chapter 15: Barriers to foreign direct investment (FDI) in China's hinterland areas

Clemens H. Hofmeister


The objective of this chapter is to reveal barriers that limit foreign direct investment (FDI) inflow into China's south-western landlocked border province Yunnan. The Chinese Central Government's intentions to accelerate the development of its south-western frontier are documented by a programmatic article, written by Pan Qi (1985) which lays out what would become a core argument for China's increased engagement with neighbouring countries. Notably, it asserts that an opening towards Myanmar and Southeast (SE) Asia would benefit economically not only China's south-western provinces but the whole nation. First, it is imperative to consider the Central Government's policies and assistance to make Yunnan attractive for foreign investors, and second, to look at the Catalogue for the Guidance of FDI industries and the Catalogue of Superior Industries for Foreign Investment in Central and Western Regions, instituted by the Chinese government, which reveal both policy orientations and guidance for foreign-funded enterprises. Multinational enterprises (MNEs) as well as central and local governments have different considerations in relation to investment strategies and policies. When their strategies come together, it will be easier to attract FDI, as high consistency amongst them means greater support or encouragement and less cost and risk to MNEs. Local encouragement is often given to industries with historical advantages, a high resource endowment and a favourable investment climate, thereby reducing operational costs in many aspects.

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