Emerging Multinationals from Asia and Europe

Multinational enterprises from emerging markets have become integral to the global economy in the twenty-first century. Thus, in this book, we will provide a comprehensive inter-regional comparison of Asian and European multinationals from large- (China and Russia) and medium-sized (Taiwan) emerging markets. Additionally, we will analyze each multinational featured in our case study within the framework proposed by Ramamurti (2009, 2020). Following this, we will identify the limitations of the framework and suggest potential modifications.

This chapter examines the general investment trends and features of Taiwanese multinationals. We conduct a case study of Taiwanese multinationals, specifically Taiwan Semiconductor Manufacturing Company Limited (TSMC). Additionally, we explore TSMC’s position in the global semiconductor industry concerning Taiwanization and global production network (GPN) 2.0. For Taiwanese multinationals, outward foreign direct investment (FDI) significantly surpasses inward FDI. Global semiconductor production heavily relies on Taiwanese companies, especially TSMC, and this phenomenon is termed “Taiwanization.” Taiwanization refers to the dependence on Taiwanese companies as manufacturers and dependence on Taiwan as a location of semiconductor production. TSMC has several competitive advantages, including its technological capabilities, significant R&D spending, financial strength, and dedication to customers as a manufacturing service company. Given its competitive advantages, TSMC has become a core supplier, as envisioned by GPN 2.0. TSMC’s investment in Japan has led to related investments in the semiconductor industry, boosting the local economy. Attempting to align TSMC with Ramamurti’s (2009, 2020) framework, during its establishment, it exhibited government-specific advantages (GSA). However, it subsequently transitioned to firm-specific advantages (FSA). TSMC’s current stage of evolution can be categorized as “mature.” The global context surrounding TSMC includes the US–China conflict and the rising global demand for semiconductors.

In the 2000s, China’s outward Foreign Direct Investment increased rapidly. A total of 135 Chinese enterprises were ranked in the Fortune Global 500 by 2023. However, many of them lack firm-specific advantages (FSAs) and are more dependent on country-specific advantages (CSAs); most of their sales are generated in China. This chapter analyses the extent to which Lenovo, a Chinese Information and Communication Technology enterprise, has evolved as a multinational enterprise (MNE) in terms of (i) FSAs, (ii) CSAs, (iii) export/overseas production ratio, and (iv) geographical footprints. Lenovo has reached a mature stage regarding FSAs, as it has enhanced its Research and Development capabilities and built a world-renowned brand. In terms of geographical footprints, Lenovo has reached a mature stage, as it has subsidiaries in many countries worldwide and significant sales overseas. However, Lenovo is still in its infancy regarding CSAs, as it was originally a state institution with strong government relations. In addition, Lenovo is still in its infancy with regard to its export/overseas production ratio, as a large number of personal computers are produced in Asia. Therefore, Lenovo is currently in the adolescent stage as an MNE.

In this chapter, we applied the modified framework of the evolution as a financial MNE suggested by Ramamurti to the case of the largest Russian state-owned bank, Sberbank, which has actively pursued internationalisation since 2011. The results of our analysis demonstrate that Sberbank has benefited significantly from globalisation and Russia’s integration into the world economy to evolve from an inefficient state-owned bank established at the launch of Russia’s market transition to Russia’s leading state-owned multinational bank. We conclude that despite the fact that Sberbank possessed medium-to-high levels of bank-specific advantages in Eastern and Central Europe, it remained predominantly a regional financial multinational, as measured by the depth and breadth of its internationalisation, even at its peak. Thus, despite some limitations in the assessment methodology, Sberbank is a representative case of an adolescent financial multinational. Russia’s new reality of global isolation from Western financial markets is pushing its banks to find new markets in friendly jurisdictions such as China, India, and the United Arab Emirates. However, foreign entry into these markets is hindered by high entry costs, administrative and regulatory restrictions, and the increased risk of secondary sanctions on counterparties. Consequently, the future internationalisation strategies of Russian banks remain uncertain.

The objectives of this chapter are twofold. First, by calculating the outward foreign direct investment performance index and examining the forward and backward participation of selected emerging economies from Asia and Europe in global supply chains, we demonstrate that there have been significant structural changes in the international division of labour owing to the enhancing role of emerging market multinationals in the global economy. Second, by utilising Ramamurti’s framework of the stage of evolution as a multinational enterprise (MNE), we examine three case studies: Taiwan Semiconductor Manufacturing Company Limited (TSMC, Taiwan), Lenovo (China), and Sberbank (Russia), and provide evidence that these companies have shifted from an infant to adolescent and mature stages in their evolution. Finally, based on the results of our empirical analysis, we demonstrate the limitations of Ramamurti’s framework and outline possible directions for its modification.