China Fdi

Topics: Investment, Foreign exchange market, Emerging markets Pages: 34 (7727 words) Published: March 2, 2013
International Business Review 21 (2012) 508–517

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Equity-based entry modes of the Greater Chinese Economic Area’s foreign direct investments in Vietnam
Bih-Lian Shieh a,*, Tzong-Chen Wu b,1

Graduate Institute of Management, National Taiwan University of Science and Technology, 18 F., No. 4, Sec. 1, Chung Hsiao W. Road, Taipei 100, Taiwan, ROC Department of Information Management, National Taiwan University of Science and Technology, No. 43, Sec. 4, Keelung Road, Taipei 106, Taiwan, ROC



Article history:
Received 21 October 2010
Received in revised form 31 May 2011
Accepted 2 June 2011

In January 2007, Vietnam became the 150th member of the World Trade Organization (WTO). Vietnam is located in the heart of Asia and has a resource-rich economy, which offers it a significant advantage in attracting foreign direct investments (FDIs). The research focuses on equity-based entry mode choices adopted by multinational corporations (MNCs) in the Greater Chinese Economic Area (GCEA) for entering Vietnam. The statistical results indicate that equity-based entry modes are significant when FDI firms entering Vietnam originate from the GCEA, which includes Mainland China, Hong Kong, Taiwan, and Singapore. However, the interaction results show that industry does not have a moderating effect on the relationship between location and entry mode, whereas it is not found that industrial cluster is specific to any one location. The generalized model has implications for the theoretical and managerial perspectives of both the host and the home countries.

ß 2011 Elsevier Ltd. All rights reserved.

Entry mode

1. Introduction
Ethnic Chinese communities have been increasingly expressing interest in the multinational corporations (MNCs) in the world economy (Ahlstrom, Chen, & Yeh, 2010; Zeng & Williamson, 2007). Most existing researches in international business literatures explain the entry-mode decisions of MNCs in developed countries, from the perspective of both the home countries of parent firms and host countries, with respect to foreign direct investments (FDIs). In this case, both the home and the host countries include developing countries. Our research concerns FDIs from the Greater Chinese Economic Area (GCEA) in Vietnam, which significantly contributes to the overall literature on FDI. The GCEA comprises both the geographical and social clusters of the Chinese culture, which include Mainland China, Hong Kong, Macau, Taiwan, and Singapore. China first resolved to convert its centrally planned socialist economy into a market-driven one in 1978. The host country, Vietnam, has been initiating a series of economic reforms since 1986; it has been rather successful in attracting FDI. According to a statistics report released by the Vietnamese government, Vietnam’s State Banks provided approximately $19 billion in loans to the economy in 2009, which is equivalent to approximately onefifth of the country’s annual gross domestic product (GDP). Vietnam provides a subsidized interest rate to banks for promoting enterprises and export businesses.

* Corresponding author. Tel.: +886 2 23119933x1000; fax: +886 2 23881116. E-mail addresses: (B.-L. Shieh), (T.-C. Wu). 1
Tel.: +886 2 27333141; fax: +886 2 27376360.
0969-5931/$ – see front matter ß 2011 Elsevier Ltd. All rights reserved. doi:10.1016/j.ibusrev.2011.06.001

B.-L. Shieh, T.-C. Wu / International Business Review 21 (2012) 508–517


We could not find any publications that developed a formal theory for investigating MNCs from emerging economies (Demirbag, Tatoglu, & Glaister, 2009); further, MNCs in emerging countries have not been studied yet in the context concerning MNCs from developing countries. The objective of this study is...
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