Internationalization of Chinese Multinational Enterprises in Small Open Economies: A Comparative Case Study of Geely and Huawei

Abstract

This thesis examines a specific subset of foreign direct investments going from the Global South to the Global North, namely foreign direct investments from China to small open economies. This has been done in the form of a qualitative case study of the internationalization journeys made by the two large Chinese multinational enterprises Geely and Huawei. Both of these companies started in China in the 1980s, grew large, and established a presence in Sweden during two different crises within their respective industries, Geely in the automotive industry in the early 2010s and Huawei in the information and communications industry in the early 2000s. Information about this has been gathered from secondary sources and then analyzed using two different theoretical frameworks, namely The Ownership, Location and Internalization Framework and The Linkage, Leverage, and Learning Framework. The findings in this paper indicate that both companies made use of well-established companies within their respective industries to advance their own R&D capabilities and gain access to new technology. Geely did so by acquiring the struggling but technologically advanced Volvo Cars outright, and Huawei by starting a new wholly owned subsidiary which absorbed a highly skilled workforce from Ericsson as it was undertaking massive layoffs.The paper reaches the conclusions that large Chinese multinational enterprises use internationalization strategies which allow for a high degree of control to gain access to strategically important resources when establishing themselves in small open economies, and that market entry challenges from such establishments can be successfully handled by operating in conjunction with an already established local company.