Popular in Professional

Culture and Society

The City as a Growth Machine: Toward a Political Economy of Place

New York University Harvey Moltoch

Education

The Role of Education in Reducing Racial Inequality

University of Southern California Pedro A. Noguera

Law

Diversity and Social Mobility in the UK legal profession

Law Society I. Stephanie Boyce

Internet Law

The Law of AI for Good

University of San Diego Orly Lobel

Pharmacy

Cytotoxic Activity and Anti-Migratory Effect of Berberine-Phytantriol Liquid Crystalline on Non-Small-Cell Lung Cancer

University of Technology Sydney Kamal Dua

Human Rights Law

Transforming Restorative Justice for Transitional Settings

University of Nottingham Kerry Clamp

Education

Internationalization pathways of Chinese private firms

View more insights in Professional - Business - Management

View more figures from University of Leeds

View the page of Meng Song

View the page of Nigel Driffield

Read the Study

Nigel Driffield and Meng Song show that variations in internationalization of private Chinese firms can be better explained by traditional internationalization theories than by the typical approach proposed in the recent literature that centers on state-created advantages.

Image courtesy of interviewee. April 15, 2024

Generating Workspace

Export as PDF

The discussion focuses on the internationalization of Chinese firms, differentiating between state-owned enterprises (SOEs) and private sector firms. The speakers argue that prior studies overly generalize the behavior of Chinese firms, conflating state influence with the characteristics of being Chinese. They suggest that private Chinese firms follow similar internationalization pathways as firms from other countries, engaging in a gradual process of exporting before moving to foreign direct investment (FDI).

Key points include:

1. **Distinction Between State Influence and Chinese Identity**: The speakers emphasize the importance of separating the effects of being state-owned from the broader notion of Chinese firms, indicating that many private firms exhibit behaviors aligned with international norms.

2. **Internationalization Pathways**: They observe that private Chinese firms’ strategies for international growth resemble those of firms from developed nations, involving incremental steps such as starting with exporting and then moving into foreign markets progressively.

3. **Role of Firm-Specific Advantages**: The discussion highlights that individual firm capabilities—such as efficiency, innovation, and technology—are crucial for success in international markets, rather than solely relying on government support.

4. **Comparative Analysis**: They recommend comparing Chinese firms that successfully internationalize with those that do not, rather than broadly comparing all Chinese firms with those from developed nations.

5. **Impact of Financial Performance**: The financial health of private firms is vital for them to engage successfully in international endeavors, particularly in seeking knowledge abroad through various forms of investment.

6. **Policy Implications**: The speakers suggest that if the Chinese government aims to boost non-state-owned firms' roles in international markets, it should consider policy support to enhance their financial capabilities and resources.

The overarching theme is that understanding individual firm dynamics is essential in crafting effective policies for enhancing China's global business presence.

Language:

Export as PDF

X-TIMESTAMP-MAP:LOCAL=00:00:00.000,MPEGTS=900000

00:00.325 --> 00:04.085
I think where we came at this from is there are an awful

00:04.085 --> 00:07.605
lot of people who study internationalization

00:07.705 --> 00:08.765
of Chinese firms,

00:09.305 --> 00:12.845
and they then infer various things from their results

00:12.985 --> 00:14.965
and they say, so Chinese firms are very,

00:14.965 --> 00:16.285
very different from everybody else.

00:16.825 --> 00:21.285
And actually what, what we thought was they're conflating

00:22.295 --> 00:24.605
state owned or state influenced,

00:25.465 --> 00:29.565
and Chinese, those two things not being the same.

00:30.505 --> 00:34.525
Um, so for example, were you to look at the Korean firms

00:34.745 --> 00:36.645
who internationalized with,

00:37.085 --> 00:40.285
although they were private with, with strong,

00:41.365 --> 00:42.535
I'll call it encouragement

00:42.535 --> 00:46.175
or strong emphasis on strategy from their home government.

00:46.605 --> 00:48.015
They, they took a particular

00:48.395 --> 00:50.215
internationalization development pathway.

00:50.795 --> 00:55.415
And, and Chinese SOEs state home enterprises are,

00:55.435 --> 00:58.855
are very similar that they are, if not directed,

00:58.955 --> 01:01.535
but strongly influenced by the government

01:01.555 --> 01:02.895
to achieve certain names.

01:03.475 --> 01:06.175
Um, and we thought, well, that's, that's a feature

01:06.275 --> 01:09.375
of being state owned or state influenced.

01:09.845 --> 01:12.575
It's not really a feature of being Chinese.

01:13.275 --> 01:16.335
So what we did specifically was to take a set

01:16.335 --> 01:20.295
of private sector firms, private sector Chinese firms,

01:21.155 --> 01:22.215
and then say, well,

01:22.215 --> 01:24.655
what does their international pathway look like?

01:25.235 --> 01:28.055
And, and that's when we get actually their international

01:28.055 --> 01:32.295
pathway looks exactly the same as any other set of firms

01:32.555 --> 01:36.735
who internationalize, they could be Danish or Malaysian or,

01:36.795 --> 01:38.695
or whatever that, that it's a set

01:38.695 --> 01:43.295
of private sector firms making a series of decisions over

01:43.795 --> 01:46.255
how they internationalize that they might sort

01:46.255 --> 01:48.815
of dip their toe in the water than they do a little bit more

01:49.005 --> 01:50.855
than they do a little bit more and so on.

01:50.995 --> 01:54.695
So, so that was very much where we started from, was to, was

01:54.695 --> 01:56.535
to try and disentangle the idea

01:56.595 --> 01:59.455
of being Chinese from being state owned

01:59.565 --> 02:01.335
because we see an awful lot

02:01.335 --> 02:03.655
of Chinese investment coming into the west

02:03.955 --> 02:05.255
and coming into the uk.

02:05.475 --> 02:08.255
And if we're going to try and attract it or not attract it

02:08.435 --> 02:10.375
or maximize the benefits of it, we need

02:10.375 --> 02:12.175
to better understand their strategy.

02:13.055 --> 02:14.415
I totally agree with Nigel

02:14.415 --> 02:17.335
and thank you very much for giving such a good explanation.

02:17.715 --> 02:22.015
So, the point I think Nigel wants to make is to,

02:22.685 --> 02:24.735
instead of comparing,

02:25.235 --> 02:28.895
multinationals from develop countries with multinationals,

02:29.235 --> 02:30.895
coming from China directly,

02:31.395 --> 02:35.135
and we need to compare, multinationals coming from China

02:35.595 --> 02:38.615
and the firms from China that do not manage

02:38.635 --> 02:39.975
to go internationalized.

02:40.125 --> 02:43.495
Yeah. So this is our, point of making this paper.

02:44.235 --> 02:47.655
So if we, if we start with, there's, there's an awful lot

02:47.895 --> 02:50.495
of literature that tries to conceptualize

02:51.195 --> 02:52.775
internationalization decisions,

02:53.235 --> 02:56.975
and typically they tell the story as though

02:58.005 --> 03:01.285
it's a nicely laid out incremental process.

03:02.305 --> 03:06.245
So for example, it used to be that they would tell a story

03:06.245 --> 03:08.445
where you start off by exporting,

03:08.755 --> 03:12.045
then you export a little bit more, then you engage

03:12.075 --> 03:15.965
with maybe, some form of, sort

03:15.965 --> 03:18.925
of assembly process in a another country.

03:19.345 --> 03:22.365
And then eventually as, as you reach a certain scale,

03:22.365 --> 03:24.205
then you start making stuff abroad.

03:24.305 --> 03:27.285
And, and it's, it's, the literature often tells this story

03:27.285 --> 03:30.565
as though it's a really kind of smooth incremental process

03:30.825 --> 03:33.485
of we do this, then we do this, then we do this, and,

03:33.665 --> 03:35.205
and life's not like that.

03:36.025 --> 03:38.605
You know, life is, life is messy.

03:38.745 --> 03:41.565
You can, you know, the, the famous strategy about, you know,

03:41.565 --> 03:44.125
everybody has a strategy until they get punched in the face.

03:44.585 --> 03:47.085
Um, business is exactly the same.

03:47.385 --> 03:49.925
You know, that, that you can have a brilliant strategy,

03:50.065 --> 03:53.205
but then something happens, you know, you can have a,

03:53.225 --> 03:54.365
an amazing strategy.

03:54.665 --> 03:58.005
And then as many firms founded, you know, the president

03:58.005 --> 03:59.605
of America sends out a tweet

04:00.225 --> 04:03.165
and that changes, changes everybody's perception of things.

04:03.465 --> 04:07.045
Um, so, so I think that the, so the, the, as I say,

04:07.045 --> 04:08.565
the prior literature sets out this,

04:08.755 --> 04:10.205
this kind of nice smooth process.

04:10.305 --> 04:12.285
And one of the things that we're saying is actually,

04:12.285 --> 04:14.605
it's not like that that, that it's,

04:14.705 --> 04:18.045
it can be sector specific, it can be region specific.

04:18.195 --> 04:20.925
Different firms might behave in different ways.

04:21.385 --> 04:24.605
Um, one of the things that, that we highlighted for example,

04:24.865 --> 04:26.885
is, is the literature talks about these things

04:26.885 --> 04:29.725
that they tend to label as firms specific assets

04:29.905 --> 04:31.525
or ownership advantages.

04:31.525 --> 04:35.165
In other words, things that, things that are specific

04:35.305 --> 04:39.165
to the firm that's enabled a firm to internationalize.

04:39.625 --> 04:42.885
And, and one of the things we identify is actually, yes,

04:42.885 --> 04:45.725
that is true, but they also, they also covered things

04:45.725 --> 04:49.565
that you might not have thought about, like particular kind

04:49.565 --> 04:52.365
of, you know, particular accreditations

04:52.505 --> 04:55.085
or particular types of organization

04:55.185 --> 04:59.965
or the ability to manage resources in particular ways rather

04:59.995 --> 05:03.245
than just kind of focusing on technology

05:03.385 --> 05:06.525
or your ability to make widgets cheaper than somebody else's

05:06.525 --> 05:07.685
ability to make widgets.

05:07.785 --> 05:10.685
So I think, I think that's what we're trying

05:10.685 --> 05:11.805
to get across. I think.

05:12.225 --> 05:15.005
So I think another contribution of this paper is

05:15.005 --> 05:18.885
that we distinguish, between FDI,

05:18.885 --> 05:20.005
motive motives

05:20.345 --> 05:22.485
and we look at the, drivers

05:23.065 --> 05:26.125
of conducting FDI motivated by different motives.

05:26.385 --> 05:31.365
So we, we find that for, FDI for firms looking,

05:31.425 --> 05:35.405
for knowledge, they need to really have like strong,

05:35.405 --> 05:36.925
knowledge, themselves,

05:37.225 --> 05:39.445
and they also need to have really good financial

05:39.445 --> 05:42.885
performance, to allow them to seek knowledge abroad.

05:43.075 --> 05:46.085
Whereas, the series also predict

05:46.085 --> 05:49.285
that exporting is leading, to FDI.

05:49.545 --> 05:52.405
But we also, in our finding, we find that,

05:52.475 --> 05:55.085
exporting experience is more related to firms

05:55.475 --> 05:59.485
that are seeking market abroad rather than, more related

05:59.545 --> 06:01.645
to other, motivated FDI.

06:01.785 --> 06:03.845
So I think that's another contribution that,

06:03.905 --> 06:04.965
this paper makes.

06:05.585 --> 06:10.245
So, the data we used, is called national survey of

06:10.295 --> 06:12.165
above scale private firms in China.

06:12.585 --> 06:13.805
So it is collected

06:13.825 --> 06:16.725
and maintained by the supervisory agency

06:16.985 --> 06:20.685
of private sector in China is called All China Federation

06:20.865 --> 06:22.005
of Industry and Commerce.

06:22.545 --> 06:26.085
So basically conducts, conducts yearly surveys

06:26.085 --> 06:28.725
of private sectors to understand their behavior,

06:28.785 --> 06:30.725
to understand their role in the Chinese economy.

06:31.105 --> 06:33.725
So the, the, the, the,

06:33.865 --> 06:36.005
the firms are really large scale firms.

06:36.465 --> 06:40.445
Uh, they, they, they have operating, income

06:40.505 --> 06:44.525
of more than 3 million, RB all

06:44.665 --> 06:47.485
for about 45 million US dollars per year.

06:47.905 --> 06:51.485
And, the reason for us to use this survey is, is that

06:51.485 --> 06:55.485
because it covers a wide range of, firm,

06:55.485 --> 06:58.085
characteristics, their business activities,

06:58.255 --> 06:59.565
their innovation behavior,

06:59.785 --> 07:01.525
and their internationalization behavior.

07:02.065 --> 07:05.605
So, we have lots of variables that is rarely available,

07:06.105 --> 07:07.445
in large scale service.

07:08.525 --> 07:13.505
And also, for the, modeling, we're using,

07:13.505 --> 07:16.465
multilevel, sorry, multi logic model

07:16.605 --> 07:19.625
and logic model to study what makes firms

07:19.885 --> 07:21.105
to internationalize

07:21.445 --> 07:25.585
and to study, what motivates firms to do different kinds

07:25.585 --> 07:26.745
of FD activities.

07:27.165 --> 07:31.985
So I think our, key story is that, we compare firms

07:32.375 --> 07:35.305
that, are able to do exporting

07:35.485 --> 07:37.625
and firms that are able to do FDI

07:37.725 --> 07:40.265
and we compare those firms with, firms

07:40.375 --> 07:42.745
that remain domestic,

07:42.775 --> 07:44.825
that only serves domestic market, right?

07:45.085 --> 07:48.465
So what we find that is, if you want, if,

07:48.525 --> 07:51.865
if a Chinese private firm wants to do exporting, they need

07:51.865 --> 07:54.825
to be efficient enough, they need to have a higher,

07:54.825 --> 07:56.585
higher productivity than other firms.

07:57.085 --> 08:00.985
And they also need to have some knowledge in, in, in terms

08:01.005 --> 08:03.425
of innovation input such as r and d

08:03.525 --> 08:06.105
and also innovation output such as patents.

08:06.325 --> 08:10.465
So these capabilities, these capabilities in, efficiency

08:10.465 --> 08:15.145
and technologies allow them to go, to, export

08:15.685 --> 08:18.345
and for, for, other firms that wants to,

08:18.345 --> 08:22.825
to go a step further to conduct FDI, exporting,

08:23.025 --> 08:25.385
destinations important for these firms

08:25.485 --> 08:29.065
to learn about foreign markets, to learn about, for example,

08:29.245 --> 08:32.665
product, preferences, customer preferences,

08:32.715 --> 08:35.585
about, the competition, what's the competition like,

08:35.645 --> 08:38.505
in foreign countries, and also accumulate some experience

08:38.505 --> 08:39.585
to operate business there.

08:39.805 --> 08:42.465
And all this kind of experience, we summarize it

08:42.525 --> 08:46.625
as exporting experience in helping firms to,

08:46.695 --> 08:47.745
conduct FDI.

08:48.365 --> 08:51.185
And then, if some firms wants to go further,

08:51.445 --> 08:55.445
if if they are, seeking knowledge abroad,

08:55.635 --> 08:59.565
they really need to have, a strong knowledge themselves,

08:59.865 --> 09:03.365
and also need, need to have, internal,

09:03.365 --> 09:06.365
financial support to allow them to seek knowledge abroad.

09:06.585 --> 09:09.725
So I think that's our story. Thank you. Yeah.

09:09.825 --> 09:12.325
So I think, I think amongst some that up really well,

09:12.505 --> 09:16.565
and you'll notice that the story that Hmong told,

09:16.655 --> 09:19.165
there was a firm level story.

09:19.225 --> 09:21.605
It was all about firms doing this firm,

09:21.775 --> 09:23.565
firms having disability.

09:23.985 --> 09:26.565
And, and that's one of the things that I think we, we want

09:26.565 --> 09:28.805
to bring out that perhaps I didn't mention earlier, that,

09:29.225 --> 09:31.165
an awful lot of the literature

09:31.165 --> 09:34.645
that focuses particularly on emerging economies

09:34.665 --> 09:39.005
and FDI from emerging economies essentially contrasts

09:39.005 --> 09:42.925
what we call firm specific advantage that we talked about

09:42.945 --> 09:45.205
before with what is usually labeled

09:45.305 --> 09:47.085
as country specific advantage.

09:47.305 --> 09:51.525
And the idea is that firms from the west have, if you like,

09:51.525 --> 09:54.285
leading technology, they have knowledge, they have all

09:54.285 --> 09:56.725
of this, firms from emerging economies.

09:56.725 --> 09:59.205
What they have is they have, they have government support

09:59.345 --> 10:03.205
or they have, they have, they have activities

10:03.205 --> 10:05.125
that they're doing at large scale, you know,

10:05.125 --> 10:09.645
like say RAM in India making millions and millions

10:09.645 --> 10:10.645
and millions of packets

10:10.645 --> 10:12.765
of paracetamol every day, whatever it is.

10:12.945 --> 10:15.445
But it underplays the technological

10:15.705 --> 10:17.205
or the knowledge side of things.

10:17.545 --> 10:19.325
And what we've demonstrated here is

10:19.325 --> 10:23.245
that actually when you look at a set of firms where you can,

10:23.265 --> 10:26.125
you can isolate that country level effect

10:26.125 --> 10:27.925
because all of these firms are Chinese,

10:28.465 --> 10:30.885
you still then get the importance of the firm.

10:30.985 --> 10:33.285
In other words, it's not government support

10:33.345 --> 10:36.645
or government influence that's driving this, it's knowledge

10:36.645 --> 10:38.125
and technology and ability

10:38.835 --> 10:41.205
amongst Chinese firms exactly the same

10:41.205 --> 10:42.885
as if we were talking about German firms.

10:43.945 --> 10:48.885
So I think as ever with these things, given one of, one

10:48.885 --> 10:50.525
of the things that you, that you notice

10:51.225 --> 10:53.525
is foreign investment is something

10:53.525 --> 10:56.045
that governments think they should have a policy on.

10:56.825 --> 10:59.445
And so if you are going to have a policy on something,

10:59.995 --> 11:02.085
ideally you should also understand it.

11:03.025 --> 11:04.645
And one of the things that we see,

11:04.825 --> 11:08.565
and this is not a, a comment specifically on, on the UK

11:08.665 --> 11:10.405
or anything like that, if you are,

11:10.425 --> 11:13.125
but if, if you're going to have a policy that says, we want

11:13.125 --> 11:15.125
to not just attract this stuff,

11:15.425 --> 11:16.445
but we want to make sure

11:16.445 --> 11:18.925
that we generate the maximum benefit, you know,

11:18.925 --> 11:21.045
if we're offering a, a subsidy

11:21.045 --> 11:24.125
or if we're offering some form of incentive, you then want

11:24.125 --> 11:26.805
to maximize the benefit, whatever that benefit might be,

11:26.805 --> 11:28.565
whether it's technology or jobs

11:28.625 --> 11:30.085
or knowledge or, or whatever.

11:30.465 --> 11:31.685
So if you are, if you're going

11:31.685 --> 11:32.885
to have a policy on something first,

11:32.885 --> 11:34.085
you need to understand it.

11:34.505 --> 11:36.205
Um, so one of the things that we are trying

11:36.205 --> 11:39.085
to do in this paper is to help people understand

11:39.275 --> 11:41.925
what the motivations are, four firms,

11:42.595 --> 11:44.805
Chinese firms seeking to go abroad.

11:45.185 --> 11:49.285
Um, the, the literature tends to focus as, as Mung alluded

11:49.345 --> 11:53.125
to before, tends to focus on phrases like market seeking,

11:53.605 --> 11:56.285
IE looking for new markets or technology seeking

11:56.825 --> 11:58.405
or efficiency seeking.

11:58.745 --> 12:00.365
And what we're demonstrating is

12:00.365 --> 12:02.205
that actually the Chinese firms

12:02.205 --> 12:05.045
that are internationalizing are doing it in exactly the same

12:05.065 --> 12:08.245
way that sometimes they're looking for new markets,

12:08.435 --> 12:10.845
sometimes they're looking for, for new technology.

12:12.115 --> 12:16.485
What this tells us is where you can identify ex-ante firms

12:16.625 --> 12:20.245
who are from anywhere internationalizing to connect

12:20.345 --> 12:23.445
to technology in the, the host country.

12:24.345 --> 12:26.245
That's the stuff you don't subsidize.

12:26.345 --> 12:28.965
You know, by all means let firms come in if they're gonna

12:28.965 --> 12:32.485
create jobs, but what you don't do is give incentives

12:32.665 --> 12:34.525
for people to connect to your technology.

12:34.865 --> 12:37.725
So it's about helping us understand the motives,

12:37.725 --> 12:39.205
understanding what's going on,

12:39.345 --> 12:43.245
and then we can better have a set of policies to maximize

12:43.245 --> 12:46.005
that for whichever host country you care to think about.

12:46.525 --> 12:49.045
I think that just summarize the findings, really, the,

12:49.045 --> 12:50.205
the implications really well.

12:50.265 --> 12:54.005
The only thing I want to add is that, I,

12:54.405 --> 12:58.445
I think the paper we, specify that the, the,

12:58.465 --> 13:01.565
for private firms, especially their financial performance is

13:01.565 --> 13:04.285
very, very important for them to seek knowledge abroad.

13:04.545 --> 13:07.405
And if the Chinese, government wants to,

13:07.405 --> 13:10.525
encourage more non seeking FDI, they perhaps should,

13:10.555 --> 13:13.845
give like more support for private sectors in,

13:14.105 --> 13:15.285
in order for them to do that.

13:15.315 --> 13:19.285
Because state owned firms, they tend to get a, the majority

13:19.385 --> 13:20.645
of financial resources.

13:20.665 --> 13:23.485
But it's a question mark in terms of,

13:23.485 --> 13:26.685
how much technology they are able to acquire the board.

13:27.025 --> 13:29.605
And I think if the Chinese government wants to,

13:29.825 --> 13:33.525
let private firms to play a bigger role here, perhaps they,

13:33.635 --> 13:35.365
they, they can think about some policies

13:35.365 --> 13:37.645
to give more support for the private sectors.

00:00 - I think where we came at this from is there are an awful lot of people who study internationalization of Chinese firms, and they then infer various things from their results and they say, so Chinese firms are very, very different from everybody else.

00:16 - And actually what, what we thought was they're conflating state owned or state influenced, and Chinese, those two things not being the same. so for example, were you to look at the Korean firms who internationalized with, although they were private with, with strong, I'll call it encouragement or strong emphasis on strategy from their home government. They, they took a particular internationalization development pathway.

00:50 - And, and Chinese SOEs state home enterprises are, are very similar that they are, if not directed, but strongly influenced by the government to achieve certain names. and we thought, well, that's, that's a feature of being state owned or state influenced. It's not really a feature of being Chinese. So what we did specifically was to take a set of private sector firms, private sector Chinese firms, and then say, well,

01:22 - what does their international pathway look like? And, and that's when we get actually their international pathway looks exactly the same as any other set of firms who internationalize, they could be Danish or Malaysian or, or whatever that, that it's a set of private sector firms making a series of decisions over how they internationalize that they might sort of dip their toe in the water than they do a little bit more than they do a little bit more and so on. So, so that was very much where we started from, was to, was

01:54 - to try and disentangle the idea of being Chinese from being state owned because we see an awful lot of Chinese investment coming into the west and coming into the uk. And if we're going to try and attract it or not attract it or maximize the benefits of it, we need to better understand their strategy. I totally agree with Nigel and thank you very much for giving such a good explanation.

02:17 - So, the point I think Nigel wants to make is to, instead of comparing, multinationals from develop countries with multinationals, coming from China directly, and we need to compare, multinationals coming from China and the firms from China that do not manage to go internationalized. Yeah. So this is our, point of making this paper. So if we, if we start with, there's, there's an awful lot of literature that tries to conceptualize

02:51 - internationalization decisions, and typically they tell the story as though it's a nicely laid out incremental process. So for example, it used to be that they would tell a story where you start off by exporting, then you export a little bit more, then you engage with maybe, some form of, sort of assembly process in a another country. And then eventually as, as you reach a certain scale, then you start making stuff abroad.

03:24 - And, and it's, it's, the literature often tells this story as though it's a really kind of smooth incremental process of we do this, then we do this, then we do this, and, and life's not like that. You know, life is, life is messy. You can, you know, the, the famous strategy about, you know, everybody has a strategy until they get punched in the face. business is exactly the same. You know, that, that you can have a brilliant strategy, but then something happens, you know, you can have a,

03:53 - an amazing strategy. And then as many firms founded, you know, the president of America sends out a tweet and that changes, changes everybody's perception of things. so, so I think that the, so the, the, as I say, the prior literature sets out this, this kind of nice smooth process. And one of the things that we're saying is actually, it's not like that that, that it's, it can be sector specific, it can be region specific.

04:18 - Different firms might behave in different ways. one of the things that, that we highlighted for example, is, is the literature talks about these things that they tend to label as firms specific assets or ownership advantages. In other words, things that, things that are specific to the firm that's enabled a firm to internationalize. And, and one of the things we identify is actually, yes, that is true, but they also, they also covered things that you might not have thought about, like particular kind

04:49 - of, you know, particular accreditations or particular types of organization or the ability to manage resources in particular ways rather than just kind of focusing on technology or your ability to make widgets cheaper than somebody else's ability to make widgets. So I think, I think that's what we're trying to get across. I think. So I think another contribution of this paper is that we distinguish, between FDI,

05:18 - motive motives and we look at the, drivers of conducting FDI motivated by different motives. So we, we find that for, FDI for firms looking, for knowledge, they need to really have like strong, knowledge, themselves, and they also need to have really good financial performance, to allow them to seek knowledge abroad. Whereas, the series also predict that exporting is leading, to FDI.

05:49 - But we also, in our finding, we find that, exporting experience is more related to firms that are seeking market abroad rather than, more related to other, motivated FDI. So I think that's another contribution that, this paper makes. So, the data we used, is called national survey of above scale private firms in China. So it is collected and maintained by the supervisory agency

06:16 - of private sector in China is called All China Federation of Industry and Commerce. So basically conducts, conducts yearly surveys of private sectors to understand their behavior, to understand their role in the Chinese economy. So the, the, the, the, the firms are really large scale firms. they, they, they have operating, income of more than 3 million, RB all for about 45 million US dollars per year.

06:47 - And, the reason for us to use this survey is, is that because it covers a wide range of, firm, characteristics, their business activities, their innovation behavior, and their internationalization behavior. So, we have lots of variables that is rarely available, in large scale service. And also, for the, modeling, we're using, multilevel, sorry, multi logic model and logic model to study what makes firms

07:19 - to internationalize and to study, what motivates firms to do different kinds of FD activities. So I think our, key story is that, we compare firms that, are able to do exporting and firms that are able to do FDI and we compare those firms with, firms that remain domestic, that only serves domestic market, right? So what we find that is, if you want, if,

07:48 - if a Chinese private firm wants to do exporting, they need to be efficient enough, they need to have a higher, higher productivity than other firms. And they also need to have some knowledge in, in, in terms of innovation input such as r and d and also innovation output such as patents. So these capabilities, these capabilities in, efficiency and technologies allow them to go, to, export and for, for, other firms that wants to, to go a step further to conduct FDI, exporting,

08:23 - destinations important for these firms to learn about foreign markets, to learn about, for example, product, preferences, customer preferences, about, the competition, what's the competition like, in foreign countries, and also accumulate some experience to operate business there. And all this kind of experience, we summarize it as exporting experience in helping firms to, conduct FDI. And then, if some firms wants to go further,

08:51 - if if they are, seeking knowledge abroad, they really need to have, a strong knowledge themselves, and also need, need to have, internal, financial support to allow them to seek knowledge abroad. So I think that's our story. Thank you. Yeah. So I think, I think amongst some that up really well, and you'll notice that the story that Hmong told, there was a firm level story. It was all about firms doing this firm, firms having disability.

09:23 - And, and that's one of the things that I think we, we want to bring out that perhaps I didn't mention earlier, that, an awful lot of the literature that focuses particularly on emerging economies and FDI from emerging economies essentially contrasts what we call firm specific advantage that we talked about before with what is usually labeled as country specific advantage. And the idea is that firms from the west have, if you like, leading technology, they have knowledge, they have all

09:54 - of this, firms from emerging economies. What they have is they have, they have government support or they have, they have, they have activities that they're doing at large scale, you know, like say RAM in India making millions and millions and millions of packets of paracetamol every day, whatever it is. But it underplays the technological or the knowledge side of things. And what we've demonstrated here is

10:19 - that actually when you look at a set of firms where you can, you can isolate that country level effect because all of these firms are Chinese, you still then get the importance of the firm. In other words, it's not government support or government influence that's driving this, it's knowledge and technology and ability amongst Chinese firms exactly the same as if we were talking about German firms. So I think as ever with these things, given one of, one

10:48 - of the things that you, that you notice is foreign investment is something that governments think they should have a policy on. And so if you are going to have a policy on something, ideally you should also understand it. And one of the things that we see, and this is not a, a comment specifically on, on the UK or anything like that, if you are, but if, if you're going to have a policy that says, we want to not just attract this stuff,

11:15 - but we want to make sure that we generate the maximum benefit, you know, if we're offering a, a subsidy or if we're offering some form of incentive, you then want to maximize the benefit, whatever that benefit might be, whether it's technology or jobs or knowledge or, or whatever. So if you are, if you're going to have a policy on something first, you need to understand it.

11:34 - so one of the things that we are trying to do in this paper is to help people understand what the motivations are, four firms, Chinese firms seeking to go abroad. the, the literature tends to focus as, as Mung alluded to before, tends to focus on phrases like market seeking, IE looking for new markets or technology seeking or efficiency seeking. And what we're demonstrating is that actually the Chinese firms

12:02 - that are internationalizing are doing it in exactly the same way that sometimes they're looking for new markets, sometimes they're looking for, for new technology. What this tells us is where you can identify ex-ante firms who are from anywhere internationalizing to connect to technology in the, the host country. That's the stuff you don't subsidize. You know, by all means let firms come in if they're gonna create jobs, but what you don't do is give incentives for people to connect to your technology.

12:34 - So it's about helping us understand the motives, understanding what's going on, and then we can better have a set of policies to maximize that for whichever host country you care to think about. I think that just summarize the findings, really, the, the implications really well. The only thing I want to add is that, I, I think the paper we, specify that the, the, for private firms, especially their financial performance is very, very important for them to seek knowledge abroad.

13:04 - And if the Chinese, government wants to, encourage more non seeking FDI, they perhaps should, give like more support for private sectors in, in order for them to do that. Because state owned firms, they tend to get a, the majority of financial resources. But it's a question mark in terms of, how much technology they are able to acquire the board. And I think if the Chinese government wants to, let private firms to play a bigger role here, perhaps they,

13:33 - they, they can think about some policies to give more support for the private sectors.

Faculti AI can make mistakes