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About this book

The rise of multinational enterprises (MNEs) from emerging markets is topical, important and poses a number of questions and challenges that require considerable attention in the future from academia as well as business management. The recent takeovers of high-profile companies in developed or developing countries by non-European emerging-market MNEs (EMNEs) – such as Lenovo, Wanhua (China), Hindalco (India), CVRD (Brazil), Cemex (Mexico), Lukoil (Russia), etc. – as well as the greenfield or brownfield investments of emerging companies (such as Huawei, ZTE, Tata, Pepco, etc.) show a new trend where new kind of firms become major players globally. EMNEs have become important players in several regions around the globe, ranging from the least developed countries of Africa through the developing markets in Latin America and Asia to the developed countries of the United States or the European Union, including East Central European (ECE) countries.

EMNEs presence on the global level has resulted in numerous studies in the international literature but those research results barely cover EMNEs’ activities in the ECE region (in the East Central European EU member countries, including the Czech Republic, Hungary, Poland, Slovakia and Slovenia). The existing books typically focus on the investment activity of a single country or region (such as China or East Asia) but a comprehensive analysis is still missing in this regard. The novelty of this edited volume is that it aims at exploring EMNEs location determinants, strategies, activities and challenges in East Central Europe by discussing its anomalies to the traditional theories as well as to other types of MNEs in the ECE region. The authors focus on EMNEs not only from China but from other important emerging countries, too, such as Russia, India, South Korea, Taiwan, Turkey, Brazil or South Africa.

Table of Contents




Chapter 1. Theories of Internationalization and Foreign Direct Investment: How to Explain FDI from Emerging MNEs?

Szunomár offers a much-needed summary of the theoretical framework of foreign direct investment (FDI), as well as the concept of internationalization in order to show that traditional theories seem to be insufficient in explaining FDI decisions of emerging multinational enterprises (MNEs). After briefly presenting the traditional theories and the main findings of the Japanese school of FDI, the chapter continues with introducing the new theoretical attempts that try to explain the international expansion strategy of emerging MNEs, including driving forces and location choices. The author also explores the “specialties” the emerging countries possess, such as the essential function of home-country governments in promoting outward investment, the significance of institutions in influencing emerging MNEs’ behaviour and the outstanding role devoted to learning from others’ experiences.
Ágnes Szunomár

Chapter 2. Changing Trends of Foreign Direct Investments in East Central Europe

Foreign direct investments in East Central Europe played significant role in the economic transition process after 1990. The support of multinational business was a logical choice for most governments to improve and modernize the economy. Despite the various paths taken by the individual countries of the region an FDI-based development model has been established in each of them. This model reflected asymmetric interdependence with the multinational businesses, and therefore the benefits of the presence of global value chains were not distributed evenly. The model ran out of thrust, while economic development started to decelerate. This trend led some of the governments to turn away from the policy of unconditional FDI support and taking more balanced policy actions, which resulted in decelerating economic development and stuck of FDI inflows.
Miklós Szanyi

Emerging Multinationals from Asia


Chapter 3. Home and Host Country Determinants of Chinese Multinational Enterprises’ Investments into East Central Europe

Szunomár explores the main characteristics of Chinese investments and types of involvement and identifies the home and host country determinants of Chinese foreign direct investment (FDI) within the East Central European (ECE) region, with a focus on structural, institutional and political factors. The chapter presents the historical evolution and main characteristics of outward FDI as well as the major push drivers and public policies. By looking at the changing patterns of Chinese outward FDI in the ECE region and Chinese investors’ potential motivations when choosing a specific destination for their investments, Szunomár assumes that pull determinants of Chinese investments in the ECE region differ from those of Western companies in terms of specific institutional and political factors that seem especially important for Chinese companies.
Ágnes Szunomár

Chapter 4. Indian Companies’ Global Aspirations in East Central Europe

India’s global share in outward foreign direct investment (OFDI) among the developing countries increased from a low level of the 1980s to second only to China after 2010. Not only there has been a spectacular rise in Indian overseas investment activity, but the structure of Indian OFDI has also changed dramatically in the last decades, concentrating more on advanced economies, such as the European Union (EU). The chapter makes a critical assessment of Indian companies’ internationalization experience, by providing an empirical collection about those successful Indian companies that sought to enter the EU. The focus is on East Central Europe because the region combines attributions of both advanced and developing countries and serves as a gateway for Indian investment seeking entrance to the EU.
Tamás Gerőcs

Chapter 5. Outward Foreign Direct Investments from South Korea, Taiwan, and ASEAN in the V4 Countries

Völgyi and Peragovics present outward FDI of six emerging Asian countries (South Korea, Taiwan, Malaysia, Thailand, Indonesia, and Vietnam) in V4 countries, namely, Hungary, Poland, Slovakia, and the Czech Republic. After analysing the global trends of outward FDI of the six Asian countries, they focus on the activities of South Korean, Taiwanese, and ASEAN companies in V4 countries. Companies originating from the six Asian countries are engaged in several manufacturing and services sectors in the V4. Among them, Völgyi and Peragovics pay special attention to the automotive and electronics sectors, which are the most preferred one. In the last section of the chapter, they identify the pull factors for market- and efficiency-seeking investments in these two sectors.
Katalin Völgyi, Tamás Peragovics

Non-Asian Emerging Multinationals


Chapter 6. Russian Multinational Direct Investment in East Central European Countries

This chapter assesses the characteristics of Russian outward foreign direct investment (OFDI) and multinationals in general and in particular in five EU-member Central and East European (CEE) states, including Czechia, Hungary, Poland, Slovakia and Slovenia. Besides official statistics, the research relies on company data analysed using Dunning’s eclectic paradigm and his typology of four motives. In addition to pull factors, the importance of push factors is emphasised. Weiner finds that Russian FDI in the five CEE countries is dominated by market-seeking and, to a lesser extent, efficiency-seeking projects carried out by state-owned or state-related private firms. Most Russian FDI has been done in hydrocarbons, iron, steel and machinery, but banking, software solutions, electronic production, real estate and even the light industry have also been targeted.
Csaba Weiner

Chapter 7. Turkish Investments in Central and Eastern Europe: Motivations and Experiences

Szigetvári offers an overview of motivations and experiences of Turkish firms investing abroad, with a focus on Central and Eastern Europe. Turkey is emerging as a major foreign direct capital investor in the new millennium, Eastern Europe being one of the top investment targets for Turkish multinational firms. The economic transformation of the region and the EU integration process create new business opportunities for Turkish firms, spurred by close geographic, but also some regulatory and cultural, proximities. Central and Eastern European countries offer good possibilities for brand management and upgrading of technologies. Good relations to local political actors and joint ventures with local firms may create a better position in the local markets.
Tamás Szigetvári

Chapter 8. Motivations of Brazilian Firms to Invest in East Central Europe: Specific Home-Country Advantages and Some Host-Country Specificities Dominate

Ricz widens the geographical focus of the volume to the Latin American continent, by examining the European expansion strategies of Brazilian multinational enterprises. In terms of home-country advantages the chapter draws attention to Brazilian government policies that have actively influenced Brazilian companies’ internationalization decisions especially in the mid-2000s. It argues that the Brazilian going global strategy is rather defensive in its nature and limited in its impacts. Looking at host-country specificities of the few Brazilian companies investing in the East Central European region the study identifies the role of the diaspora and personal and informal ties as a major driving force, while some classical factors, such as low labour costs, agglomeration forces, high skilled labour force and thriving local markets, are also mentioned.
Judit Ricz

Chapter 9. South Africa: A Re-emerging Player in Global Outward FDI and a New Investor in East Central Europe?

The chapter deals with the successful reintegration of South Africa into the world economy after the demise of the apartheid regime in 1994 via foreign direct investment flows and the internationalisation of South African multinational companies. The chapter presents the magnitude, the trends, the main forms and motives as well as the geographical and sectoral distribution of outward foreign direct investment of South Africa. A unique feature of the chapter is that it analyses the state of South African investments in the Central and Eastern European region to where foreign capital is attracted by a wide range of political, macroeconomic and institutional pull factors. The chapter explores the sectoral preference of South African investors which are real estate, retail and e-commerce, manufacturing and healthcare.
Judit Kiss

Chapter 10. Final Reflections: Emerging Market Multinational Enterprises in East Central Europe

Although the current status of East Central European (ECE) countries in the process and level of their integration into global business varies, a rather general phenomenon is the exhaustion of the foreign direct investment (FDI)-led development model, at least its dominant version of the 1990s and early 2000s. On the one hand, this is a result of multinational affiliates’ isolated and strongly integrated presence in a strictly designed international cooperation system with no physical contact with local firms to deliver spillovers. On the other hand, even those affiliates that are entangled in the development of local supplier networks deliver spillovers only to a limited level. As a consequence, they are not becoming primary players of innovative local business clusters, while the design of affiliates’ activity range is usually specialized on low value-added segments of global value chains (GVC).
Ágnes Szunomár, Tamás Gerőcs, Judit Kiss, Tamás Peragovics, Judit Ricz, Miklós Szanyi, Tamás Szigetvári, Katalin Völgyi, Csaba Weiner


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