General

In the past decade, Chinese enterprises have made rapid global layout and development, and made remarkable achievements in internationalization. This has aroused the strong interest of global scholars studying the internationalization of Chinese enterprises. At present, hundreds of articles on the internationalization of Chinese enterprises have been published in the Journal of International Management. In the previous decade, we also conducted quantitative analysis and research on the data of Chinese listed companies, the China Enterprise Database of the National Bureau of Statistics, and published a series of research results in international journals. Now, the driving force of internationalization of Chinese enterprises in the past decade comes from industrial innovation, ability improvement and institutional change, which drive Chinese enterprises to forge ahead on the global stage.

Industrial innovation

In the past decade, Chinese international trade enterprises have further actively participated in the global value chain. On the one hand, participating in the global value chain can bring opportunities for enterprises in emerging economies to learn advanced technical knowledge and obtain knowledge spillovers from enterprises in developed economies that are also on the global value chain; On the other hand, due to the unequal power status, enterprises in emerging economies are often locked in low value-added links at the low end. Therefore, how to improve the ability of independent innovation, so as to climb to high value-added links, has become a key issue for emerging economy enterprises to embed into the global value chain. In the past decade, Chinese enterprises have gradually moved from focusing on the low value-added links of production, manufacturing, assembly and processing in the global value chain to the high value-added links of R&D and design. In contrast, enterprises from Vietnam, India, Mexico and other emerging economies are still mainly engaged in low value-added activities such as manufacturing, assembly and processing.

Why are there such significant differences between the enterprises of emerging economies highly embedded in the global value chain? Our research found that the local procurement capacity of Chinese enterprises is an important driving force for Chinese enterprises to improve their innovation ability and climb to the high-end in the global value chain. Local procurement capability refers to the dynamic capability of enterprises in emerging economies to shift from relying on foreign suppliers from developed economies to local suppliers in the global value chain. It is found that the marketization construction, the openness to foreign capital and the R&D intensity will significantly and positively affect the local procurement capacity of enterprises. At the same time, the local procurement capacity has significantly improved the breadth, innovation intensity and technical influence of Chinese enterprises' knowledge search. For this reason, we believe that China's international trade enterprises can better participate in the global value chain by further integrating into the supply chain of international multinational companies, cultivating high-tech and sophisticated "small giant" enterprises through local procurement, digestion and absorption, and further enhancing industrial innovation.

Ability improvement

Capacity enhancement is another important means for Chinese international trade enterprises to effectively carry out overseas operations. The data of the past decade shows that the number of Chinese enterprises employing local talents in the host country has risen sharply, indicating that many Chinese enterprises' branches and subsidiaries in the host country have further taken root and actively integrated into the local community. For example, ByteDance has more than 130000 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 entrepreneurial activities such as technological innovation to enhance enterprise capabilities?

We 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 enterprises' overseas operations. First of all, the parent company should give sufficient trust to its branches and subsidiaries in countries far away from the Chinese system. Secondly, the complexity of the institutional environment has brought challenges to the communication between the parent company and its branches and subsidiaries. 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 from continuous safety incidents and workers' demands for the establishment of a labor union. However, under the benign communication between the parent company and its branches and subsidiaries, the production capacity gradually increased. According to the semi annual report released by Fuyao Glass in August this year, the company achieved a revenue of 12.9 billion yuan in the half year, including 2.23 billion yuan in the United States; The parent company's overall net profit was 2.38 billion yuan, of which Fuyao America achieved a net profit of 260 million yuan.

Under the vagaries of global politics, many Chinese enterprises are also facing the challenges of political sanctions and supply chain decoupling. We believe that it is also a feasible method of crisis management to use the blue army strategy to enhance enterprise capabilities. Based on the case study of Huawei's internal blue army departments, we found that under the guidance of crisis awareness, Chinese enterprises can actively use the blue army strategy to create conflicts, rather than reduce conflicts, so as to improve organizational learning ability, get rid of stereotypes, maintain organizational agility, and cultivate alternative strategies, so as to cope with possible crises at any time in a highly uncertain environment. In this process, senior managers should enhance their crisis awareness and play a key role. Similarly, TikTok, the branch of ByteDance in the United States, can actively communicate with American regulators. Through localization and compliance, it has been growing rapidly under political pressure, which surprised Facebook, Snap and other competitors. The global R&D expenditure of ByteDance reached 14.6 billion US dollars last year, and continued to improve its competitiveness in terms of capacity.

Institutional change

The construction of market-oriented system is a necessary condition for China's international trade enterprises to improve their international operation level. The market-oriented reform replaces interpersonal relationship with transaction relationship, eliminates barriers to market entry and exit, reduces transaction costs, and removes institutional barriers that restrict the development of market economy, so that market participants can conduct transactions in the factor market and product market fairly and efficiently, thus providing a more fair and effective competitive environment for Chinese enterprises and forcing them to adapt to market competition. This will not only improve the overall competitiveness of the industry, but also enhance the competitiveness of Chinese enterprises 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 Chinese enterprises to accelerate their international strategic layout and improve their international level.

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, strengthen the incentive mechanism of state-owned enterprises, and radiate competitive vitality is an important test of the reform of state-owned enterprises. We find that the reform of non tradable shares has enhanced the influence of the political association of state-owned holding companies and managers on the internationalization of state-owned enterprises. Before the reform of non tradable shares, the government's influence on the internationalization of state-owned enterprises was mainly through the political connection of managers, rather than the non state-owned holding; After the reform of non tradable shares, government departments mainly influence the internationalization of state-owned enterprises through state-owned holding. The political connection mainly affects the initial decision of the internationalization of state-owned enterprises, that is, whether to carry out internationalization, while the state-owned holding mainly affects the subsequent internationalization decision, that is, the width and depth of internationalization.

In a word, the internationalization of Chinese enterprises in the past decade has been a decade of industrial innovation, capacity enhancement and institutional reform, which has added a magnificent stroke to the global economic development. Looking ahead, the trend of anti globalization, the trend of "Friendly Bank Outsourcing", and some countries' attempts to promote the decoupling of the industrial chain may pose major challenges to Chinese enterprises. However, Chinese international trade enterprises have accumulated a lot of experience and lessons in the past decade, which will continue to grow in the future.