by Ping Lv, School of Management, University of Chinese Academy of Sciences, China - Francesca Spigarelli, China Center, University of Macerata, Italy
Purpose: Taking into account bilateral political and economic relations, we analyze the role of institutional distance and host country attractiveness in location determinants of Chinese Foreign investments in EU in the renewable energy sector.
Methodology: A firm level MofCom database of greenfield and non-greenfield Chinese investments abroad is used. A six fixed-effects logit analysis is performed.
Main findings: Chinese firms tend to invest in EU countries with reduced rule of law; market affluence is an attraction factor for them, but they do not seem to be human capital asset-seekers. Countries with politically stable environment are most attractive to sales/services subsidiaries; while countries with good control of corruption, low trade barriers and encouraging foreign ownership are most attractive to manufacturing subsidiaries. A large market is the most attractive factor for R&D subsidiaries, and a rich market is the most attractive factor for manufacturing subsidiaries. Manufacturing subsidiaries are more technological asset-seekers. R&D subsidiaries are the most non-human capital asset-seekers.
Research implication/limitation: The study extends the state of the art by developing a theoretical framework, grounded on the influence of host country institutional factors and endowment of resources. Further variables should be included in the future (industrial specialization of host country, cultural distance, bilateral ties).
Practical implications: Findings suggest useful advices to EU policymakers on how to direct promotion policies to tackle Chinese investments flows.
