Xueli Huang

Managing Chinese outward foreign direct investment

Chinas outward foreign direct investment, for which Australia is one of the largest destinations, has rapidly increased and become an important source of global capital. Nevertheless, Chinese investors have encountered many challenges in making their investment decisions and managing their foreign direct investments for sustainable development and profitability. Managing Chinese Outward Foreign Direct Investment focuses on the management of Chinese outward foreign direct investment, particularly foreign subsidiaries established through merger and acquisition, at the organisational level. Considering investment as a process, the book addresses complex managerial issues from strategic entry decisions to corporate sustainable development. Particular emphases have been placed on the post-acquisition integration and management such as liability of foreignness mitigation, post-acquisition integration, corporate control and governance, human resources and cross-cultural management, and corporate social responsibility.

Political Risk and Chinese Outward Foreign Direct Investment to Africa: The Role of Foreign Aid

We investigated the role of Chinese Aid in mitigating the political risk for Chinese outward foreign direct investment (OFDI) in Africa, especially in resource-abundant countries. Using panel data for 50 African countries that have received Chinese OFDI from 2002 to 2012, we tested two hypotheses developed based on the two-tier bargaining model proposed by Ramamurti (2001). Our results indicated that Chinese aid had a positive moderating effect on the relationship between political risk and OFDI in those resource-abundant countries. However, such a moderating effect was negative for all African countries. Theoretical and managerial implications following on from this study are discussed.

Cross-Cultural Management and HRM

Many Chinese companies operating their business in overseas, namely Chinese MNCs, face the challenges of cross-cultural management. Adequate “hard” and “soft” HRM policies and practices could enable them to overcome these problems. Using case studies of Chinese companies operating in Australia, this chapter focuses on identifying problems, developing adequate policies and implementing them in a culturally appropriate manner. Companies from a transitional economy, such as China, operating in a developed economy, such as Australia, confront new challenges, particularly in the areas of new labour market environment and relevant labour laws and regulations. It is crucial for these “foreign” companies to be familiar with such new institutional and economic environments and be able to adopt and adapt new ways of doing business and managing their workforce. The outcome of the case study analysis could be useful for other companies to learn both positive and negative lessons, and this is particularly relevant to those companies from transition economies operating in developed economies.

Strategic Entry Considerations and Their Impact on Investment Performance in the Australian Mining Industry

Despite the rapid increase of OFDI from China and other developing countries and emerging economies, anecdotal evidence (Liu & Waldemar, 2011) has shown that the financial performance of these OFDIs varies substantially, and disturbingly, a large proportion of them fail. Although research over the last three decades has been dedicated to the theoretical and practical understanding of OFDI performance and its influencing factors, an overwhelming proportion of this research has focused on the OFDI from developed countries (Slangen & Hennart, 2008). Research on OFDI from developing countries to developed countries is growing and has so far concentrated on the role of institutions (Meyer, 2004), the firm’s ownership (Cui & Jiang, 2012; Cui et al., 2011) and investment motives (Deng, 2009; Rui & Yip, 2008).

Managing Post-Transaction Integration by Chinese MNCs

Cross-border acquisition has been used by Chinese MNCs as a major approach in their OFDI in the last decade. According to the UNCTAD (2014), nearly half (49.6 per cent) of the Chinese OFDI was made through acquisitions. As discussed in chapters 2 and 3, the overall performance of Chinese OFDI in the Australian mining industries, with a few exceptions, is unsatisfactory due to their entry strategy, such as investment timing, the stage of project invested and the liability of foreignness and newness. While Chapter 3 primarily deals with the liabilities of foreignness for Chinese MNCs that adopted Greenfield as their entry strategy, this chapter focuses on the issues of post-acquisition integration for Chinese MNCs using acquisition or Brownfield strategy. Post-acquisition integration has long been regarded as one of the most important factors that influences the OFDI performance (Child et al., 2001; Hitt et al., 2001) and international acquisitions by Chinese MNCs (Williamson & Raman, 2011).

Corporate Sustainable Development: How and Why Chinese-Invested Firms Engage Community in the Australian Mining Industry

Corporations are part of our society and can play a significant role in sustainable development because of their “economic scale and significance” (Clarke, 2007, p. 223) and use of productive resources. Despite the potential role played by business communities, sustainability beyond the enterprise or institutional level imposes major challenges to corporations for several reasons.

Corporate Governance in Chinese-Controlled Subsidiaries

Corporate control by MNCs of their foreign subsidiaries has become increasingly complex and challenging with a rapid increase in levels of globalisation and advancement of technology, as well as the growing participation of MNCs from emerging economies such as BRICS countries (Brazil, Russia, India, China and South Africa). Consequently, the revenues and profits generated by foreign subsidiaries can represent substantial amounts to the MNCs. Moreover, these foreign subsidies can possess considerable levels of technological and management know-how that are important for the competitive advantages of the MNCs, particularly those from emerging or developing economies and those with subsidiaries in developed countries.