Investing Overseas Without Moving Factories Abroad: The Case of Chinese Outward Direct Investment

Asian Development Review, Vol. 30, No. 1, pp. 85-107

23 Pages Posted: 11 Apr 2015

See all articles by Yiping Huang

Yiping Huang

Peking University, National School of Development

Bijun Wang

Peking University

Multiple version iconThere are 2 versions of this paper

Date Written: April 1, 2013

Abstract

Chinese outward direct investment (ODI) is unique in the sense that it starts in the early stage of economic development and does not move factories overseas. Empirical analyses using firm-level data confirm that the main purpose of Chinese ODI is to strengthen domestic production and productivity by acquiring strategic assets overseas. This Chinese style of ODI, which is different from Japanese efficiency-seeking ODI or American market-seeking ODI, is mainly underscored by significant cost advantage and abundant foreign exchange. We suggest that there might be a life cycle of ODI, which evolves from the Chinese style to the Japanese style and then to the American style as the economy develops. Following this proposition, we expect a major wave of ODI by Chinese small-sized and medium-sized manufacturing enterprises in the coming decade.

Keywords: Chinese outward direct investment, Chinese style ODI, ODI life-cycle

JEL Classification: E220, F210, F230

Suggested Citation

Huang, Yiping and Wang, Bijun, Investing Overseas Without Moving Factories Abroad: The Case of Chinese Outward Direct Investment (April 1, 2013). Asian Development Review, Vol. 30, No. 1, pp. 85-107, Available at SSRN: https://ssrn.com/abstract=2592047

Yiping Huang (Contact Author)

Peking University, National School of Development ( email )

No. 38 Xueyuan Road
Haidian District
Beijing, Beijing 100871
China

Bijun Wang

Peking University ( email )

No. 38 Xueyuan Road
Haidian District
Beijing, Beijing 100871
China

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