The Emergence of Chinese Multinational Companies (CMCs): Reality, Issues and Challenges

Abstract

The theme of global rebalancing in economic power is now central to international economic analysis, and the issue of the presence and clout of multinational companies from emerging markets has gained importance, in part because of highly publicised cases of acquisitions of (or attempts at acquiring) companies established in more mature markets, in part because of the uncertain role of sovereign funds in the global reshuffling of corporate ownership. The objective of this paper is to analyse the growing phenomenon of multi-nationalization of China’s companies.

The paper makes a detailed analysis of 15 key Chinese Multinational Companies (noted CMCs), and looks at their performance (in absolute figures as well as in comparison with international peers), their strategies and the relationship with policy/political decisions. The analysis shows that such companies are already large by international standards, are growing very rapidly in size, are moving up in technology, and are profitable, notwithstanding a visible downtrend in this profitability over the recent years. They have in general clear internationalisation strategies, even though still at an early stage for most of them. Such internationalization strategies are closely linked to the country’s national or strategic objectives, notably for securing access to natural resources. The influence of political factors and the relation between corporates’ strategies and national objectives remain dominant factors for these CMCs’ development.

Keywords: China, multinational companies, strategy, foreign investment

JEL Classification: D21, F23, L20, L25, L53, N85