Firm entry modes and Chinese business networks: Malaysian investments in Vietnam

Abstract

This paper examines the Malaysian Chinese firms that have expanded into Vietnam. Based on research and qualitative personal interviews with Malaysian Chinese firms that have invested in Vietnam, the paper unpacks the entry modes that these firms have undertaken. It argues that the Malaysian Chinese firms prefer joint ventures in their Vietnamese businesses to wholly-owned subsidiaries and personal direct investments. This paper also argues that such investments are often embedded in social and intraethnic ties, which connect Malaysian Chinese firms with Vietnam's ethnic Chinese businessmen. To this end, these firms tend to rely on informal ties and nonmarket institutions in the form of the ethnic Chinese business networks. Nevertheless, the Malaysian Chinese firms are not averse to collaborating with nonethnic Chinese firms that enjoy a good relationship with the Vietnamese state. This observation is especially marked in the property and construction, and finance sectors.

What Do Malaysian Firms Seek in Vietnam?

“…Furthermore, the paper complements earlier research (e.g. Gomez, 2006;G. Lim, 2016a;Zwart, 2007) that has only examined the outward investment of firms owned/managed by the ethnic Chinese populace of Malaysia (despite their preeminent status in the Malaysian economy) by analysing Malaysian firms regardless of their ethnicity.…”

“…Lim, 2016a;Zwart, 2007) that has only examined the outward investment of firms owned/managed by the ethnic Chinese populace of Malaysia (despite their preeminent status in the Malaysian economy) by analysing Malaysian firms regardless of their ethnicity. The paper's ethnic-neutral outlook also shifts attention away from the culturalist school of thought that has long influenced, perhaps excessively, scholars covering Malaysian business (see G. Lim, 2016a). Such an approach is more inclusive as many of the firms analysed in this paper are government-linked companies (GLCs), key agents of the Malaysian economy.…”

“…In the context of Malaysia and Vietnam, the influx of Malaysian FDI into the latter has taken place amidst an intensifying bilateral economic interaction since Vietnam liberalized its economy in its 1986 doi moi (renovation) reform. Accompanying such economic transformation is the growing number of cross-country marriages between Malaysian (ethnic Chinese) men and Vietnamese women (G. Lim, 2016a). In certain ways, the economic fortunes of both countries are intertwined through these business (and to a smaller extent, socioeconomic) networks.…”

Public policy with Vietnamese characteristics: the case of the motorcycle industry

“…The situation worsened as Vietnam invaded Cambodia in late 1978 to remove the Khmer Rouge regime from power, triggering a military response from China (the patron of the Khmer Rouge regime). Although the Chinese-Vietnamese conflict lasted only a few weeks in early 1979, it destroyed a significant portion of Vietnam's infrastructure along its northernmost provinces, weakening Vietnam's productive capacity (see also Lim 2016a). The Cambodian invasion also brought about an embargo from various countries and international agencies, further isolating Vietnam from the rest of the world.…”

Managing Technological Development: A Study of Vietnam’s Telecommunication Goods Industry

“…Supporting this assertion is the somewhat disappointing performance of the SOEs. While some Vietnamese SOEs have indeed tightened their grip on modern technology and grown their businesses (to be illustrated in the subsequent paragraphs), many of them are still plagued by inefficiency and mismanagement (see Lim, 2016;Masina, 2006;Painter, 2005;Pincus, 2015). More specifically, a lack of state supervision and poor corporate governance standard has opened up opportunities for the SOEs to invest in risky and speculative non-core projects such as real estate and finance, diverting resources away from their core activities.…”