Determinants of the Performance of Foreign Invested Enterprises in China

Leonard K. Cheng*, Changqi Wu

*Corresponding author for this work

Research output: Journal PublicationsJournal Article (refereed)Researchpeer-review

4 Citations (Scopus)

Abstract

In this paper, we attempt to uncover the key determinants of the performance of foreign invested enterprises (FIEs) in China. The results reveal that cash contributed by foreign parent companies had a significantly positive impact on current profitability, but not on subjective performance. There was some evidence that foreign management improved subjective performance. The duration of operation was a consistently positive factor in the success of the FIEs in both profitability and subjective performance. FIEs that sold more output to the domestic market performed better, and so did FIEs in industries consistent with China's comparative advantages. Unexpectedly, FIEs owned by Hong Kong investors did not perform any better than FIEs owned by other foreign investors and FIEs located in Special Economic Zones (SEZs) performed worse than those located outside of SEZs. J. Comp. Econ., June 2001, 29(1), pp. 347-365. Hong Kong University of Science and Technology, Clear Water Bay, Kowloon, Hong Kong. Copyright 2001 Academic Press. Journal of Economic Literature Classification Numbers: F23.

Original languageEnglish
Pages (from-to)347-365
Number of pages19
JournalJournal of Comparative Economics
Volume29
Issue number2
DOIs
Publication statusPublished - 1 Jun 2001
Externally publishedYes

Fingerprint

Foreign-invested enterprises
China
Hong Kong
Profitability
Special economic zones
Foreign investors
Factors
Domestic market
Parent company
Comparative advantage
Investors
Economics
Industry
Cash
Water

Cite this

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title = "Determinants of the Performance of Foreign Invested Enterprises in China",
abstract = "In this paper, we attempt to uncover the key determinants of the performance of foreign invested enterprises (FIEs) in China. The results reveal that cash contributed by foreign parent companies had a significantly positive impact on current profitability, but not on subjective performance. There was some evidence that foreign management improved subjective performance. The duration of operation was a consistently positive factor in the success of the FIEs in both profitability and subjective performance. FIEs that sold more output to the domestic market performed better, and so did FIEs in industries consistent with China's comparative advantages. Unexpectedly, FIEs owned by Hong Kong investors did not perform any better than FIEs owned by other foreign investors and FIEs located in Special Economic Zones (SEZs) performed worse than those located outside of SEZs. J. Comp. Econ., June 2001, 29(1), pp. 347-365. Hong Kong University of Science and Technology, Clear Water Bay, Kowloon, Hong Kong. Copyright 2001 Academic Press. Journal of Economic Literature Classification Numbers: F23.",
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Determinants of the Performance of Foreign Invested Enterprises in China. / Cheng, Leonard K.; Wu, Changqi.

In: Journal of Comparative Economics, Vol. 29, No. 2, 01.06.2001, p. 347-365.

Research output: Journal PublicationsJournal Article (refereed)Researchpeer-review

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