China outward foreign direct investment.pdf

China’s outward foreign direct investment Wei He a,*, Marjorie A. Lyles b aCollege of Business, Indiana State University, 800 Sycamore Road, Terre Haute, IN 47809, U.S.A. bKelley School of Business, Indiana University, 801 West Michigan Street, Indianapolis, IN 46202-5151, U.S.A. Business Horizons (2008) 51, 485—491 /locate/bushor KEYWORDS China; United States; Outward foreign direct investment; Liability of foreignness Abstract China’s outward foreign direct investment (FDI) is steadily increasing. The United States is now a key target for China’s outward FDI, and the response by the American public tends to fall at opposite ends of the spectrum: fever or fear. Chinese FDI in the United States faces challenges posed by its liability of foreignness in political, cultural, marketing, and technological aspects. Utilizing mini case studies, we herein examine the polarized responses to Chinese outward direct investment, its history, and the challenges faced by Chinese multinational corporations operating in or attempting to enter the U.S. market. Finally, strategy suggestions are proposed. # 2008 Kelley School of Business, Indiana University. All rights reserved.1. China’s outward foreign direct investment Like the Taoist philosophy of yin and yang in every- thing, China’s growing international activity and its foreign direct investment in other countries, such as the United States, have aroused two opposite re- sponses among the citizens of those countries. On one hand, there is a feverish pursuit of Chinese investment; for example, American governors and mayors have flocked to China during the past few years soliciting Chinese investors for their states and cities, as well as promoting Chinese purchase of their goods. As former Virginia governor Mark Warner once remarked, ‘‘Virtually every American governor has visited China’’ (Warner, 2005). On the other hand, fear was the response to Chinese computer maker Lenovo’s acquisition of IBM’s PC* Corresponding author. E-ma