Location Choices of Chinese Multinationals in Europe: The Role of Overseas Communities

Tinbergen Institute Discussion Paper 16-078/VII

43 Pages Posted: 30 Sep 2016

See all articles by Bas Karreman

Bas Karreman

Erasmus Research Institute of Management (ERIM); Erasmus University Rotterdam (EUR) - Erasmus School of Economics (ESE); Tinbergen Institute

Martijn Burger

Erasmus University Rotterdam (EUR) - Erasmus Happiness Economics Research Organization (EHERO)

Frank van Oort

Erasmus University Rotterdam (EUR) - Erasmus School of Economics (ESE)

Date Written: September 30, 2016

Abstract

Overseas Chinese communities are an important determinant in the location choice of greenfield investments made by mainland Chinese multinational enterprises across European regions. Conceptually embedded in a relational approach, this effect is shown through an empirical analysis of an exhaustive set of investment projects across NUTS-1 regions in 26 European countries for the period 2003-2010. When controlling for endogeneity bias and the embeddedness of existing Chinese economic activity, we find that the importance of overseas communities in the location choices of Chinese firms is based on increased access to strategic information. Our results confirm that the relationship between the size of an overseas Chinese community and the probability of Chinese investment is stronger for communities hosting newer generations of Chinese migrants; in addition, they partially corroborate that this relationship is stronger when the education level of the community’s Chinese migrants is higher. Our findings are particularly robust in the context of knowledge-intensive sectors and high value-added functions.

Keywords: Overseas Chinese communities, China, Europe, greenfield FDI, relational view

JEL Classification: F20, L20, R30

Suggested Citation

Karreman, Bas and Burger, Martijn and van Oort, Frank, Location Choices of Chinese Multinationals in Europe: The Role of Overseas Communities (September 30, 2016). Tinbergen Institute Discussion Paper 16-078/VII, Available at SSRN: https://ssrn.com/abstract=2845797 or http://dx.doi.org/10.2139/ssrn.2845797

Bas Karreman (Contact Author)

Erasmus Research Institute of Management (ERIM) ( email )

P.O. Box 1738
3000 DR Rotterdam
Netherlands

Erasmus University Rotterdam (EUR) - Erasmus School of Economics (ESE) ( email )

P.O. Box 1738
3000 DR Rotterdam, NL 3062 PA
Netherlands

Tinbergen Institute ( email )

P.O. Box 1738
3000 DR Rotterdam
Netherlands

Martijn Burger

Erasmus University Rotterdam (EUR) - Erasmus Happiness Economics Research Organization (EHERO) ( email )

P.O. Box 1738
Rotterdam, 3000
Netherlands

Frank Van Oort

Erasmus University Rotterdam (EUR) - Erasmus School of Economics (ESE) ( email )

P.O. Box 1738
3000 DR Rotterdam, NL 3062 PA
Netherlands

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