Chinese Industrial Outward FDI Location Choice in ASEAN Countries

Abstract

This paper examined the location choices of Chinese outward FDI (OFDI) from 2005–2016 with a particular focus on the Association of Southeast Asian Nations (ASEAN) countries. It was found that Chinese OFDI in ASEAN countries was generally focused on areas that had large potential markets and low tax rates. Unlike previous studies, it was found that primary and secondary industry labor costs were the main motivators rather than resource-seeking. The business environment in the host countries was also found to have positive and significant effects on Chinese OFDI location choice for the agricultural, mining, construction, and information industries. The insights in this paper could provide useful suggestions for both governments and investors.

Spatial Pattern and Influencing Factors of Outward Foreign Direct Investment Enterprises in the Yangtze River Economic Belt of China

“…OFDI will play an increasingly significant role in developing an "open economy" in China [32]. To study temporal and spatial patterns of OFDI in China, scholars have mainly used regression models [4], GIS spatial visualization methods [17], the Theil index method [33], gravity models [34], and panel data models [35] in their research. The studies have investigated OFDI location selection, development characteristics and investment modes and patterns to provide useful conclusions, such as those that suggest that China's OFDI location is determined by market demand, natural resources, trade factors, technical-level factors, labor cost factors, institutional factors, etc.…”

“…Expanding outward foreign investment to rationally allocate resources on a global scale for the acquisition of development dividends from other fast-developing countries is an important measure for China to achieve further innovative development in this new stage [1][2][3]. Pursuing sustainable development under the "new normal", the Chinese government launched the "One Belt One Road" initiative [4,5]. After the National Development and Reform Commission issued the "Vision and Actions for Promoting the Joint Construction of the Silk Road Economic Belt and the 21st Century Maritime Silk Road" in 2015 [6], China's OFDI ushered in a new era.…”

China's quest for economic dominance and energy consumption: Can Asian economies provide natural resources for the success of One Belt One Road?

“…Foreign investment decisions are thought to be part of any firm's global strategic activities, rather than thinking of it as a specific business dealing (Pan, 2017). These strategic perspectives are more closely associated with EMNEs as their decision to invest abroad is to implement strategic intent towards exploring the competitive advantage they are yet to possess (Lucke & Eichler, 2016) along with utilizing their competitive advantage such as low‐cost advantages related to labor or natural resources (Ma, Xu, Zeng, & Wang, 2020). This is why strategic intents provide motivations for firms from emerging markets to invest so that they can achieve strategic goals.…”

Dynamic interaction between outward foreign direct investment and home country industrial upgrading: Regional differences in China

“…By the end of 2018, China's 27,000 domestic investors established 43,000 OFDI enterprises distributed in 188 countries globally, with a net OFDI of US$ 1,982,265 million. The reason behind China's OFDI decline in 2017 could be that the Chinese government reviewed the authenticity and compliance of domestic enterprises' OFDI, which has effectively curbed irrational OFDI (Fang et al, 2019;Ma et al, 2020).…”