The Internationalization of Chinese Firms: A Case for Theoretical Extension?

TLDR

Chinese firms pursue technological and brand assets to build competitive positions abroad, yet unlike mainstream theory that assumes advantage exploitation, they invest to overcome disadvantages, and each internationalization route carries distinct benefits and risks. This study investigates the patterns and motives behind the internationalization of prominent market‑seeking Chinese firms. The firms pursue inward internationalization through OEM and joint ventures, and outward internationalization via acquisitions and organic expansion abroad. The authors argue that the Chinese case extends theory in four areas: latecomer and catch‑up strategies, institutional analysis of government roles, entrepreneur‑institution relations, and liability of foreignness.

Abstract

This paper examines the patterns of, and motives for, internationalization by prominent market-seeking Chinese firms. Case studies of these firms indicate that they are seeking technological and brand assets to create a competitive position in international markets. While mainstream theory tends to assume that firms internationalize to exploit competitive advantages, Chinese firms are generally making such investments in order to address competitive disadvantages. They are engaging in ‘inward’ internationalization by means of original equipment manufacture (OEM) and joint venture partnerships, and ‘outward’ internationalization by means of acquisition and organic expansion abroad. Each of these routes offers certain benefits coupled with its own challenges or risks. The paper concludes that the Chinese case offers an opportunity to extend present theorizing in four primary areas concerning the latecomer perspective and catch-up strategies, institutional analysis with reference to the role of government, the relations between entrepreneurs and institutions, and the liability of foreignness.