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Asia Pacific Journal of Management
Erschienen in: Asia Pacific Journal of Management 1/2018

11.07.2017 | Perspectives

Exploring China’s state-led FDI model: Evidence from the extractive sectors in Latin America

verfasst von: Daniel M. Shapiro, Carlos Vecino, Jing Li

Erschienen in: Asia Pacific Journal of Management | Ausgabe 1/2018

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Abstract

Our study explores an under-examined way in which the Chinese government supports outward foreign direct investment (OFDI): state supported development loans to host countries. Through such loans, the Chinese government develops commercial and diplomatic relationships with host countries, which in turn facilitate Chinese firms’ access to natural resources while at the same time limiting their exposure to host country political risk. We provide evidence in Latin America that although Chinese OFDI occurs in countries where government-related political risk is high, Chinese firms are less likely to be involved in public disputes with the host government. However, they are more likely to engage in conflicts with nongovernment stakeholders. Thus, while the Chinese government may assist in obtaining a political or legal license to operate, Chinese firms appear to have more difficulty obtaining a social license to operate, suggesting that the Chinese model has limits, notably with respect to mitigating social risks.
Vorheriger Artikel Globalization, entrepreneurship and paradox thinking
Nächster Artikel Political hazards and entry modes of Chinese investments in Africa

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Fußnoten
2
Our definition of nonmarket risk is broadly consistent with the definition of political risk in Simon (1984) and Alon and Martin (1998), where political risk includes both government and social risk. For the purposes of our study, we define political risk as that related to government actions only.
 
3
This database is appropriate for our study because we focus on natural resource investments, the size of which is usually large, and thus most deals in this sector are likely covered by the dataset. However, we also acknowledge its limitation because small investments are excluded. We encourage future researchers to collect data from different national sources in order to produce a more comprehensive dataset.
 
4
This is consistent with the findings by the UN Economic Commission for Latin America and the Caribbean (UNECLAC, 2015), suggesting that 90% of Chinese FDI in the region from 2010 to 2013 was in natural resources. See also Ludeña (2012).
 
5
The top six FDI recipient countries are the same, based on different data sources (Fig. 3 and Table 2). The rankings are different due to time period differences. Aid consists of technical assistance, official grants, or concessional loans (Wolf et al., 2013).
 
10
See Pinkham and Peng (2017) for a recent discussion on the use of arbitration in international business.
 
11
Disputes with host governments are recorded only when home and host countries have an IIA, though the form of the IIA may differ. See http://​investmentpolicy​hub.​unctad.​org/​ISDS.
 
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Metadaten
Titel
Exploring China’s state-led FDI model: Evidence from the extractive sectors in Latin America
verfasst von
Daniel M. Shapiro
Carlos Vecino
Jing Li
Publikationsdatum
11.07.2017
Verlag
Springer US
Erschienen in
Asia Pacific Journal of Management / Ausgabe 1/2018
Print ISSN: 0217-4561
Elektronische ISSN: 1572-9958
DOI
https://doi.org/10.1007/s10490-017-9526-z

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