Networks and internationalisation into China

Download .pdf, .docx, .epub, .txt
Did you like this example?

Introduction and Research Problem

Since its economic opening in 1979, China has become one of the world’s largest recipients of foreign direct investment (FDI). In 2007, inflows to China totalled over US$82 billion, bringing China’s cumulative FDI to almost US$700 billion for the period 1979 to 2007 (CSB 2007). But what has particularly captured both academic and popular attention is the extent to which China’s massive levels of FDI may be attributable to “diasporic” ethnic Chinese capital, what Harvard academic John Kao famously termed the “Chinese commonwealth” (Kao 1993: 24). It has often been asserted that some two-thirds of all the foreign investment that has poured into China originated from ethnic Chinese living outside of China (e.g., Wolf 2002: 134).

This unprecedented level of intra-ethnic investment presents something of a headache to mainstream FDI theories, which, at the level of the firm, tend to explain internationalisation as an incremental process resulting from, variously, the pursuit of market power, an internalising of technological improvements, and the accumulation of foreign market knowledge and experience. Protesting against this type of theorizing as “under-socialised” and “Western-centric,” many Asia scholars (who are frequently also Asian) developed an alternative account drawn upon insights from “network theory” and some sociological studies of Chinese firms done in the 1990s. Their account—which in this dissertation is referred to as the “Chinese Capitalism” corpus—spans a variety of disciplinary frameworks including anthropology, economic geography and sociology, development economics, management, and Southeast Asia Regional studies, but has at its heart the premise that ethnic Chinese enterprises dominate the economic activity of East Asia and FDI flows into China in large part because of their ability to draw upon dense, interlinked networks of social/family/political relationships that span national boundaries. These linkages are commonly known as Chinese business networks (CBN). The assertion that ethnic Chinese engage in pervasive networking on an international scale has become so ubiquitous in popular and academic literature that it is usually considered a stylized fact.

But is it true that—despite citizenship in countries with differing social structures, political economies, and histories—the Chinese diaspora is linked by transnational webs of strong personalistic ties? And have these webs actuated and facilitated massive flows of FDI to China? If so, this would suggest that ethnic Chinese business operates in a distinctive manner, that it is proper to speak of a “Chinese Capitalism” in which flexibly linked Chinese enterprises might even form a competitive substitute for formally structured Western and Japanese multinational enterprises (MNEs). Alternatively, it has been suggested that the concept of CBN might simply be a cultural myth which obscures, possibly exaggerates and distorts, the internationalisation of ethnic Chinese enterprises (Mackie 2000). If so—if intra-ethnic networking is ill-defined, over-stated and under-researched—what should we make of the prevalence of the CBN discourse in economics-based disciplines? And, if they are not advantaged by networks, how should mainstream FDI theories be amended to account for the fact that at the turn of the 21st century we find so many Singaporean enterprises in China?

Do you want to see the Full Version?

View full version

Having doubts about how to write your paper correctly?

Our editors will help you fix any mistakes and get an A+!

Get started
Leave your email and we will send a sample to you.
Thank you!

We will send an essay sample to you in 24 Hours. If you need help faster you can always use our custom writing service.

Get help with my paper
Sorry, but copying text is forbidden on this website. You can leave an email and we will send it to you.