General

In the past ten years, Chinese enterprises have developed rapidly around the world and have made remarkable achievements in internationalization. This has aroused the strong interest of scholars who study the internationalization of Chinese enterprises around the world. At present, hundreds of articles on the internationalization of Chinese enterprises have been published in the Journal of International Management. In the past ten years, we have also conducted quantitative analysis and research on the data of Chinese listed companies and the Chinese enterprise database of the National Bureau of Statistics, and published a series of research results in international journals. Looking at it now, the driving force of Chinese enterprises' internationalization in the past ten years has come from industrial innovation, capability improvement, and institutional reform. These three aspects have driven Chinese enterprises to forge ahead on the global stage.

Industrial innovation

Over the past decade, Chinese international trade companies have further actively participated in global value chains. On the one hand, participating in global value chains can bring opportunities for emerging economies to learn advanced technical knowledge and gain knowledge spillovers from companies in developed economies that are also on the global value chain; Enterprises in the economy are often locked in the low value-added segment by the low-end. Therefore, how to improve the capability of independent innovation, so as to climb to the high value-added link has become a key issue for enterprises in emerging economies to embed in the global value chain. In the past ten years, Chinese enterprises have gradually moved from focusing on the low-value-added links of manufacturing, assembly and processing in the global value chain to the high-value-added links of R&D and design. In contrast, companies from a number of emerging economies such as Vietnam, India, and Mexico are still mainly engaged in low-value-added activities such as manufacturing, assembly and processing.

Why are there such significant differences between companies from emerging economies that are highly embedded in the global value chain? Our research found that the local procurement capabilities of Chinese companies are an important driving force for Chinese companies to improve their innovation capabilities and move up the global value chain. Local sourcing capability refers to the dynamic capability of enterprises in emerging economies to procure from foreign suppliers from developed economies to local suppliers in the global value chain. The study found that market-oriented construction, openness to foreign investment and R&D intensity will significantly and positively affect the local procurement capabilities of enterprises. At the same time, the local procurement capability has significantly improved the breadth, innovation intensity and technological influence of Chinese enterprises in knowledge search. To this end, we believe that the better participation of Chinese international trade enterprises in the global value chain lies in further integrating into the supply chain of international multinational companies, and through local procurement, digestion and absorption, cultivating high-tech and sophisticated "little giant" enterprises, and further enhancing industrial innovation.

Ability improvement

Capability improvement is another important means for Chinese international trade enterprises to efficiently carry out overseas operations. Data from the past ten years shows that the number of Chinese companies hiring local talents in the host country has skyrocketed, indicating that many Chinese companies’ branches and subsidiaries in the host country have further taken root and actively integrated into the local community. For example, ByteDance has more than 130,000 employees worldwide, and its business has covered more than 150 countries and regions. How to use branches and subsidiaries to absorb local technical knowledge resources, and more effectively carry out technological innovation and other corporate entrepreneurial activities to enhance corporate capabilities?

Our research found that the parent company's trust in its branches and subsidiaries, and the effectiveness of communication play an important role in this process. These findings have important implications for Chinese companies going overseas. First of all, the parent company should give enough trust to branches and subsidiaries in countries far from China's system. Secondly, the complexity of the institutional environment has brought challenges to the communication between the parent company and its branches and subsidiaries, and it is necessary to explore and establish an effective communication mechanism. A typical example is that Fuyao Glass was put into production in Dayton, Ohio, USA in 2016. During this period, it suffered huge losses in successive years, suffered from constant safety incidents, workers demanded the establishment of labor unions and other turmoil. , the production capacity is gradually increased. According to the semi-annual report released by Fuyao Glass in August this year, its half-year revenue reached 12.9 billion yuan, of which Fuyao's US revenue reached 2.23 billion yuan; the parent company's overall net profit was 2.38 billion yuan, of which Fuyao's US achieved a net profit of 260 million yuan Yuan.

Under the turmoil of global politics, many Chinese companies are also facing the challenges of political sanctions and supply chain decoupling. We believe that using the blue army strategy to improve corporate capabilities is also a feasible method for crisis management. Based on the case study of Huawei's internal blue army department, we found that under the guidance of crisis awareness, Chinese enterprises can actively use the blue army strategy to actively create conflicts rather than reduce them, thereby improving organizational learning ability and getting rid of the mindset , maintain organizational agility, and cultivate alternative strategies for responding to crises that may arise at any time in a highly uncertain environment. In this process, senior managers should enhance crisis awareness and play a key role. Similarly, TikTok, ByteDance’s U.S. subsidiary, can actively communicate with U.S. regulators. Through localization and compliance, it has grown at a high speed under political pressure, surprising competitors such as Facebook and Snap. ByteDance's global R&D expenditure reached US$14.6 billion last year, continuing to improve its competitiveness in terms of capabilities.

The power of institutional change

The construction of a market-oriented system is a necessary condition for Chinese international trade enterprises to improve their international operation level. The market-oriented reform replaces interpersonal relationships with transactional relationships, eliminates barriers to market entry and exit, reduces transaction costs, and removes institutional obstacles that restrict the development of market economy, so that market participants can conduct transactions in the factor market and product market fairly and efficiently, thereby reducing transaction costs. It provides a fairer and more effective competitive environment for Chinese enterprises and forces them to adapt to market competition. This will not only improve the overall level of competition in the industry, but also improve the competitiveness of Chinese companies in overseas markets. The reform of the market-oriented system, including improving the legal environment and enhancing the openness of the financial market, has a significant and positive impact on the acceleration of the internationalization strategy of Chinese enterprises and the improvement of the level of internationalization.

On the other hand, the reform of state-owned enterprises is an important topic of market-oriented reform. How to promote the reform of state-owned enterprises, enhance the incentive mechanism of state-owned enterprises, and rejuvenate the vitality of competition is an important test for the reform of state-owned enterprises. We find that the share structure reform enhances the influence of state-owned holdings and managers' political connections on the internationalization of state-owned enterprises. Before the share-trading reform, the government's influence on the internationalization of state-owned enterprises was mainly through the political connections of managers, rather than state-owned holdings; Political connection mainly affects the initial decision of the internationalization of state-owned enterprises, that is, whether to carry out internationalization, while state-owned holding mainly affects the subsequent internationalization decision, that is, the breadth and depth of internationalization.

All in all, the internationalization of Chinese enterprises in the past ten years has been a decade of industrial innovation, a decade of capability enhancement, and a decade of institutional reform, adding a magnificent stroke to global economic development. Looking into the future, the wind of anti-globalization, the tide of "friend-ship outsourcing", and some countries' attempts to decouple the industrial chain may all bring major challenges to Chinese enterprises. However, Chinese international trade enterprises have accumulated a large number of The experience and lessons will be accumulated and prosperous in the future.