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13 - Chinese Multinational Firms in Southeast Asia: A Study of Chery in Malaysia

from PART 2 - MULTINATIONAL ENTERPRISE STUDIES

Published online by Cambridge University Press:  06 September 2019

Zhang Miao
Affiliation:
Associate Professor, Institute of Malaysia Studies, Research School for Southeast Asian Studies, Xiamen University
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Summary

Introduction

The economic rise of China has generated substantial impact on the globe. Its economic influence following market reforms has had wide ranging ramifications as Chinese firms have become integrated into global production networks as suppliers initially, and since the beginning of 2000, Chinese multi-national corporations (MNCs) have gradually expanded to initiate regional and global production networks (Zhang and Rasiah 2015; Rasiah, Zhang and Kong 2013). While China's miraculous growth has been largely stimulated by economic reforms since 1978 and its insertion into the World Trade Organization (WTO) in 2001, economic slowdown from the global financial crisis (that was triggered by the implosion of the United States economy) drove the government not only to invest domestically on infrastructure but also to encourage national firms to invest abroad. Following the launch of the “Going-out” policy, Chinese MNCs started to strategize by seeking market opportunities abroad. While the acquisition of the computer division of International Business Machines (IBM) preceded the global financial crisis of 2007–8, acquisitions accelerated after the crisis. The previously Swedish-owned Volvo was among the acquisitions that took place since the crisis. Also, China's outward investment has shown an evolving pathway shifting from capital and resource-intensive industries (including resource-seeking and infrastructure), to market-seeking and technologyintensive industries (especially in transport and telecommunication equipment manufacturing).

Despite forays into Africa and Central Asia, China's FDI has expanded most in the Association of Southeast Asian Nations (ASEAN). Home to around 600 million people in 2015, ASEAN has attracted global attention as an important frontier for growth. ASEAN's US$2,460 billion economy, coupled with its fairly good infrastructure, stability and business-friendly environment, has attracted global MNCs to locate in the region. The implementation of ASEAN–China Free Trade Agreement (ACFTA) and the ASEAN Economic Community (AEC) by 2015 has further added to prospects of cross-border flows of investment between China and ASEAN.

While China–ASEAN economic relations is becoming increasingly integrated, a major focus of researchers and policymakers has been on understanding the motives for Chinese investment in Malaysia, and how such investment is impacting on host-site economies. While the extant literature has extensively discussed the bilateral trade and investment activities (including the importance of MNCs as a mechanism to organize cross-border economic exchanges and activities), little analytical work exists on the specific motives of Chinese investment and its impact abroad.

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Publisher: ISEAS–Yusof Ishak Institute
Print publication year: 2019

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