China’s Outward Foreign Direct Investment: Patterns, Drivers and Implications for Host Countries

China has become a major source country of Outward Foreign Direct Investment (OFDI) recently. The rapid increase of Chinese OFDI comes, however, at a surprise given the overall economic development level of the country. With more than two-thirds of Chinese investors being state-owned enterprises (SOEs) and huge government financial support for their “going global”-activities, not only companies’ investment strategies and corporate motivations but also the role of the state in driving OFDI need to be considered. While most of the investment is driven by market-seeking and natural resource-seeking, access to strategic assets such as technology, brand names, management skills and reputation plays an increasingly important role as well. Similar to companies from Japan in the 1980s and Korea in the 1990s, Chinese enterprises have to make the transition from low-cost to higher value-added manufactures. Since the global financial crisis the investment climate in Europe and the USA has relaxed and Chinese investors are more welcome than before and able to pursue a strategic asset-seeking strategy. Based on the review of the theoretical and empirical literature and complemented by our own research results, the presentation aims at giving an overview of the geographical and sectoral distribution of Chinese OFDI and analyse the drivers and implications of Chinese OFDI for recipient countries in Europe.

Dr Margot Schüller is Senior Research Fellow and Deputy Director of the GIGA  (German Institute of Global and Area Studies) Institute of Asian Studies, Hamburg. As an independent Think Tank, co-financed by the Foreign Ministry and the City Government of Hamburg GIGA Institute of Asian Studies carries out research on contemporary political, economic and social developments in Asian countries. Dr Schüller is a regular lecturer on Chinese and East Asian economics at universities in Germany and abroad. In addition, she is a frequent consulter for governmental and private institutions. Her research focusses on China’s economic development, especially the transition of the banking and state sector, China’s innovation system and policy  and the globalization of Chinese companies.