Chinese foreign direct investment in R&D in Europe: A new model of R&D internationalization?

SummaryAlong with their mounting economic might, emerging economies are becoming the object of ever closer analytical attention. Yet the phenomenon of international research and development (R&D) from multinationals headquartered there still remains neglected. The current study analyzes Chinese companies’ investment in R&D in Europe, focusing on three different aspects: technology exploration vs. technology exploitation as investment motive; locational strategies for R&D investments; and the dynamics of motives of overseas R&D units. The analysis proceeds to draw out differences between the R&D internationalization process of multinationals from developed economies and those from emerging economies. Evidence of Chinese R&D internationalization is provided through analyses of five cases of international R&D units set up by Chinese companies in Europe: ZTE Corporation, JAC Motors, Chang’an Motors, Hisense Group, and Hisun Group. Based on the analyses we find that the Chinese R&D units represent important differences from the conventional R&D internationalization process of developed-country multinationals. These differences come about when R&D internationalization is driven predominantly by learning rather than technological innovation, as the extant literature tends to assume. Chinese R&D units appear to evolve often from a strategy of pure technology exploration, over fusion of foreign technologies with R&D activities back home, into one of technology exploitation in foreign locations.

► The current study analyzes Chinese companies investment in R&D in Europe.
► Differences in R&D mgmt. of MNC from emerging countries are highlighted.
► Evidence of Chinese R&D internationalization is provided through case studies.
► Chinese R&D units don’t fit with the conventional view of R&D internationalization.
► Chinese R&D units evolve from pure tech. exploration, into tech. exploitation.