Chinese outward foreign direct investment: An opportunity to revisit international business theory

The theoretical explanation of Chinese outward foreign direct investment (COFDI) poses a challenge to established theories of the multinational enterprise because they were largely conceived to explain Western, private, manufacturing investment and COFDI may be none of these because Chinese investment may be by state-owned companies and in service- or trade-supporting activities. This chapter shows that internalisation theory can satisfactorily explain COFDI but that it requires a ‘special theory’ within the general theory to explain particular features of the Chinese context. COFDI is itself evolving, and this requires renewed attention to the strategy, management and evolving structures of Chinese multinationals. We can expect further theoretical refinement and continuing work on the impact of Chinese management of the evolution of multinational enterprise.