Problem and Objective
The rise of China’s economy has brought a constantly growing number of Chinese firms which, being pushed by the Chinese government’s GO GLOBAL POLICY implemented in 2001, entered into the international markets. These global activities of Chinese firms captured the attention of international managers, politicians, and scholars alike. Besides the remarkable pace and scope of Chinese outward foreign direct investment (OFDI) development, three further specifics account for this unprecedented phenomenon: First, mergers and acquisitions (M&A) gradually became the preferred form of Chinese OFDI. Second, since 2012 the majority of Chinese M&A has been targeting developed countries. Third, since 2011 Europe attracted twice as much annual Chinese OFDI as the United States, while in 2014 Chinese OFDI to Europe reached new record levels with US$18 billion (Baker & McKenzie, 2015; MOFCOM, 2013). Figure 1 illustrates the tremendous growth of Chinese OFDI in Europe.
Figure 1. Chinese OFDI development in Europe
Numerous studies exist that examine Chinese firms regarding either their market entry strategies, i.e., location choice (Kang & Jiang, 2012; Liu, Buck, & Shu, 2005), ownership mode (Globerman & Shapiro, 2009; Rui & Yip, 2008), entry mode (Cui & Jiang, 2009; Liu & Buck, 2009), or regarding their antecedents, such as determinants (Alon, 2010; Buckley et al., 2007), and motivations (Deng, 2004; Lu, Liu, & Wang, 2011). However, studies focusing solely on Chinese OFDI in Europe and on just one industry hardly exist (Di Minin, Zhang, & Gammeltoft, 2012; Milelli, Hay, & Shi, 2010). By considering both industry-specifics and host country-specifics, it can significantly contribute to a better understanding of the drivers and thus of the investment patterns of Chinese firms.
The common base line of most studies is that Chinese firms’ internationalization shows some unique characteristics in their investment patterns. These include the active involvement of the home government (Luo, Xue, & Han, 2010; Nolan & Zhang, 2002), the search for strategic assets (Boateng, Qian, & Tianle, 2008; Duanmu, 2012), or the fast learning capabilities (Zhou & Li, 2007; Morck, Yeung, & Zhao, 2008). Because of these peculiarities, some scholars argue that Chinese OFDI cannot be explained by traditional internationalization theories and hence new theories must be generated (Barney & Zhang, 2009; Peng, 2012). On the opposite side, other scholars view existing theories as suitable for China’s global operations (Rugman & Li, 2007), or just call for their extensions (Dunning & Lundan, 2008; Mathews, 2006).
Dunning’s (1980) Ownership-Location-Internalization (OLI) paradigm has been widely used for investigating Chinese firms’ investment motives and determinants (Berning & Holtbrügge, 2012; Wei, 2010). Asset- and market-seeking are found to be the two most important investment motives behind Chinese OFDI in developed countries (Marchand, 2015; Mathews, 2006). In particular, Chinese firms are driven by strategic asset-seeking motives (Luo & Tung, 2007) that results in both asset exploiting and asset augmenting (Cui & Jiang, 2010; Yiu, 2010), stronger emphasis on strategic intent than strategic fit (Rui & Yip, 2008), rapid setup of Chinese R&D laboratories (Deng, 2007), and the preference for M&A over greenfield investment in developed countries (Deng, 2009; Spigarelli, Alon, & Mucelli, 2015).
Regarding the investment determinants of Chinese firms, most existing research states that a single theoretical lens may be inadequate to explain them because of the complex and unstable external environments, as well as the heterogeneous internal resources and capabilities (Alon, Child, Li, & McIntyre, 2011; Lu et al.2011; Peng, Wang, & Jiang, 2008). A comprehensive and systematic framework to examine the determinants of Chinese and other emerging market firms’ (EMF) OFDI was developed by Holtbrügge and Kreppel (2012) comprising country-, industry- and firm-level determinants. As this framework includes all idiosyncrasies of Chinese firms’ internationalization, it enables a more fine-grained comprehension of how the investment motives are contingent on country, industry and firm factors.
The purpose of this chapter is to examine the investment patterns, motives and determinants of Chinese firms in developed European countries. In particular, the focus is on M&A undertaken in only one industry; namely, the football industry. The reasons for the choice of the football industry are threefold: First, this under-researched industry represents a good opportunity to examine if the overall Chinese trends and their unique specifics are also reflected here. Due to the high media attention the football industry receives, a lot of detailed information about these investments are available. Second, the European football industry became an economic heavy weight during the last two decades with revenues of more than €19 billion (Hamil & Chadwick, 2010). Third, China’s government strongly focuses on football development and China’s president Xi Jinping is a big football fan. Xi has already made football a compulsory part of the national curriculum for schoolchildren and has developed a series of football textbooks for students in primary and secondary school (MacFarlan, 2015).
The contributions of this chapter are as follows. By adding Dunning’s typology of investment motives, this study extends the level-wise determinants-framework of Holtbrügge & Kreppel (2012). In order to test the explanatory power of this extended framework, a within-case and cross-case analysis is conducted. Moreover, by addressing the interplay between context-specifics and firm internationalization, this article considers the often-cited uniqueness of Chinese firms. In doing so, this chapter contributes to the above-mentioned academic debate about the applicability of traditional internationalization theories to China (Boisot & Meyer, 2008; Child & Rodrigues, 2005; Cuervo-Cazurra, 2012), i.e., regarding the key question of “why” outward foreign direct investment (OFDI) is undertaken, by suggesting a way of how to conceptualize a theoretical extension.
The remainder of this study is as follows. After a review on Dunning’s OLI paradigm the country-, industry- and firm-level determinants-model with reference to distinct investment motives is outlined. Then the explanation of the methodology and the case studies’ results are presented. A concluding section with theoretical and managerial implications, limitations and future research directions follow.