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Key Terms
acquisition 419
consortium 424
cross-licensing agreement 424
equity joint venture 420
equity participation 420
foreign direct investment (FDI) 410
greenfield investment 419
horizontal integration 421
international collaborative venture 411
international portfolio investment 410
joint venture 411
merger 419
project-based, nonequity venture 423
vertical integration 421
wholly owned direct investment 420
Summary
In this chapter, you learned about:
• International investment and collaboration
Foreign direct investment (FDI) is an internationalization
strategy by which the frm establishes a physical presence
abroad through ownership of productive assets such as
capital, technology, labor, land, plant, and equipment. An
international collaborative venture is a cross-border business alliance in which partnering frms pool their resources
and share costs and risks of the venture. A joint venture is a
form of collaboration between two or more frms that leads
to minority, equal, or majority ownership.
• Characteristics of foreign direct investment
FDI is the most advanced and complex entry strategy and
involves establishing manufacturing plants, marketing subsidiaries, or other facilities abroad. For the frm, FDI requires
substantial resource commitment, local presence and operations in target countries, and the ability to access comparative advantages. It also entails greater risk compared to other
entry modes. FDI is most commonly used by MNEs—large
frms with extensive international operations. Services are
intangible and typically cannot be exported. Services are
usually location-bound and require frms to establish a foreign presence, generally through FDI. International portfolio
ChaPtEr 14 • ForEign dirECt invEstMEnt and CollaborativE vEnturEs 431
further efforts by both parts is needed to align investments to the
level of importance of the foreign trade between the two partners.
Case Questions
14-4. Analyze Chinese FDIs overall trend, and compare the case of
USA and the EU. How do the two trends relate one to another, if any?
14-5. Take into considerations Chinese FDIs in Europe: what are the
motivating factors of Chinese presence in Europe? How does it
compare to the FDI doctrine studied in the rest of the chapters?
14-6. What are the main countries and sectors where Chinese FDIs
have been concentrated in the last five years? What are the
reasons behind these choices?
14-7. Now look at the latest trends as analyzed in the last section.
Why, in your opinion, are Greenfield investments are on the
rise? Which other novelties can be expected in the coming
years regarding Chinese presence in Europe?
14-8. Over the last decade Chinese investments in the EU have
been welcomed. How would you assess the EU’s likely
attitude to Chinese investment in the longer term?
Sources: china.org.cn, Australia rejects China Nonferrous’s acquisition of Lynas, 25 September 2009, http://www.china.org.cn/business/
highlights/2009-09/27/content_18609842.htm; World Resource Institute,
China’s Overseas Investments, Explained in 10 Graphics, January 28,
2015, http://www.wri.org/blog/2015/01/china%E2%80%99s-overseasinvestments-explained-10-graphics ; Baker&McKenzie, Chinese investment into Europe hits record high in 2014, 11 February 2015, http://
www.bakermckenzie.com/news/Chinese-investment-into-Europe-hitsrecord-high-in-2014-02-11-2015/; Ministry of Commerce of the People’s
Republic of China, National Bureau of Statistics of the People’s Republic
of China, State Administration of Foreign Exchange. (2014). 2013
Statistical Bulletin of China’s Outward Foreign Direct Investment. Beijing,
China: China Statistics Press EU Website, Foreign direct investment statistics 2014, http://ec.europa.eu/eurostat/statistics-explained/index.php/
Foreign_direct_investment_statistics
Cavusgil, S. T., Knight, G., & Riesenberger, J. (2016). International business : The new realities, global edition. Retrieved from http://ebookcentral.proquest.com
Created from griffith on 2020-07-12 18:38:09.
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