Following state-owned enterprises: the location strategies of Chinese private multinationals

This is the authors' abstract. We don't add key points for this paper.

Global investment by multinational enterprises (MNEs) from China has drawn considerable attention in economic geography in recent years. Among Chinese MNEs, state-owned enterprises (SOEs) generally wear the mantle of “pioneers” and “leaders” on behalf of the Chinese government. Simultaneously, private-owned enterprises (POEs), albeit latecomers on the global stage, have also emerged as significant entities. Nevertheless, previous studies mainly focus on the difference in location strategies between SOEs and POEs in global investment, with little attention paid to the effect of SOEs on the location strategies of POEs’ global investments. To fill this gap, we conduct a descriptive and empirical analyses based on greenfield investment data from 2003 to 2022. The results show that: (1) Although the scale and proportion of global investments by Chinese POEs have increased rapidly, SOEs, especially those affiliated with the central government (CSOEs), manifest a discernible superiority over POEs in terms of investment intensity and market expansion and exhibit a trend to operate in distant and high-risk countries; (2) The investment experiences of Chinese SOEs in host countries lead to the entry of Chinese POEs, but this effect is mainly contributed by CSOEs; (3) The demonstration effect of SOEs is more significant when POEs are small or have limited global investment experience, and when POEs invest in host countries with higher market risks and business costs, and geographically and culturally distant from China.