China Favour or Fear? An Analysis of Chinese Investment to New Zealand

Abstract

The study of liability of foreignness (LOF) has been going on for decades in the field of international business (IB) research, in terms of its sources, outcomes and mitigation. In recent years, the amount of Chinese outward FDI has dramatically increased, which has led to a surge in research focusing on the internationalisation patterns of Chinese multinational enterprises (MNEs). Some believe that there is a unique situation, with China adapting its own internationalisation process and, therefore, the LOF that Chinese MNEs face differs from MNEs from other countries in particular host countries. However, no one has investigated the LOF MNEs face in a focal country. Accordingly, this study directly examines the unique LOF that Chinese MNEs face in New Zealand. Foreign investors from China and other nations, which have been investing in New Zealand in the last 10 years, have been chosen. Using five case studies by employing face-to-face interviews with the foreign investors, this study finds evidence to suggest that Chinese MNEs do suffer longer and higher scrutiny than investors from other foreign countries. Moreover, the findings suggest that Chinese MNEs do find it is harder to adapt to New Zealand culture and, therefore, to embed themselves in the local business environment. With regards to the attitude that the New Zealand general public has towards Chinese investors, evidence suggests that New Zealanders do not discriminate Chinese investors but they still do not like Chinese investors. The findings of this study suggest that the extent of LOF vary among subsidiaries of MNEs from different nationalities, and that the assumptions surrounding Chinese foreign investors need to be re-examined. The work presented here has profound implications for future studies of LOF and may one day help solve the problem of mitigating LOF in specific host countries.