The failed advance of Chinalco on Rio-Tinto and the quick success of Minmetals’ acquisition of Oz Minerals within a week in June 2009 represented China’s persistent thirst for natural resources such as iron ore and bauxite. However, the eagerness and scale of acquisitions of foreign mining companies by China’s large state-owned enterprises cannot be satisfactorily explained by existing investment or business theories. As a result, it is imperative to propose alternative theories on the motivation of Chinese big businesses making OFDI. Using Chinalco as a case study, this chapter makes the following theoretical propositions and conclusions. First, unlike western transnational corporations (TNCs), Chinese big businesses going global are part of the country’s powerbuilding globalisation strategy. Second, with soft budget constraints and extended protection by the government beyond the nation’s boundary, these business champions can outstrip their foreign competitors in taking risks and raising investment capital. The on-going world financial crisis has become a catalyst for them to catch up with gigantic TNCs of the most advanced industrial economies. Third, foreign TNCs need be aware of these differences to benefit from Chinese OFDI.
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- China’s OFDI and Resource-seeking Strategy: A Case Study on Chinalco and Rio-Tinto
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