1. 'Emerging Multinationals' - Copenhagen, 09-10-2008 Chinese FDI in Italy first draft Roberta Rabellotti and Marco Sanfilippo* *Phd Candidate in Politics and Economics of Developing Countries Department of Economics, University of Florence marco.sanfilippo@unifi.it

2. 'Emerging Multinationals' - Copenhagen, 09-10-2008 Research Outline Review of the theoretical literature on emerging multinationals Analysis of Chinese MNEs’ competitive advantages and motivations of Chinese FDI Evidence from European countries – setting Italy in the European perspective Mapping Chinese FDI in Italy Preliminary considerations based on secondary evidence Research on the field (to be done)

3. 'Emerging Multinationals' - Copenhagen, 09-10-2008 Chinese FDI in Europe- country level evidence

4. 'Emerging Multinationals' - Copenhagen, 09-10-2008 Chinese FDI in Europe- Firm level evidence (greenfield)

5. 'Emerging Multinationals' - Copenhagen, 09-10-2008 UK, Germany & France UK: –Finance and manufacturing (electronics, textiles, automotive) –Sales & Mkt and Headquarters (telecomm.) –M&A: Automotive (Rover); Chemicals; Renewable energy Germany: –Manufacturing and trade companies –Sales & marketing –M&A: TCL-Schneider electronics, recent interests in automotive and machineries (Invest in Germany) France: –Chinese FDI as rising source of employment (IFA, 2007) –Electronics (Hisense), chemicals, finance (Exim Bank) –M&As: TCL- Thomson; TCL- Alcatel; BlueStar-Rhodia/Adisseo

6. 'Emerging Multinationals' - Copenhagen, 09-10-2008 Chinese FDI in Italy (AT Kerney, 2008) A first phase, starting from the 1960s of “flagship” investments such as the establishment of the commercial office of Air China in Rome in 1986; A second phase, from the mid 1980s to the 1990s, characterized by “episodic” investments, among which in 1986 the Chinese Nanjing Automotive Corporation opening a representative office in Turin and in 1988 the Cemate Group which opened a commercial office to start selling Chinese machineries in Italy; A third phase, which started at the end of the 1990s and it is characterized by the entry in Italy of Chinese global players (such as Haier, COSCO, Baosteel) as well as by an increasing number of acquisition operations.

7. 'Emerging Multinationals' - Copenhagen, 09-10-2008 Mapping Chinese FDI in Italy- the dataset 56 Chinese FDI in Italy (incl. 3 ceased): –ICE-Reprint database; –Previous studies: AT Kerney, 2008; Bellabona and Spigarelli, 2007; Spigarelli, 2008; –MOFCOM Italy; –Specialized press.

8. 'Emerging Multinationals' - Copenhagen, 09-10-2008 Evolution in the ‘quality’ of Chinese FDI in Italy…

9. 'Emerging Multinationals' - Copenhagen, 09-10-2008..as well as in the modalities of entry

10. 'Emerging Multinationals' - Copenhagen, 09-10-2008 Sectoral and geographical distribution

11. 'Emerging Multinationals' - Copenhagen, 09-10-2008 The logistic sector: from defensive to offensive market-seeking investments COSCO and China Ocean Shipping Company (HQ) in Naples and Genoa; Initially, joint-ventures and strategic alliances with local enterprises and setting up of commercial offices (“defensive” investments); Recently, acquisition of European companies and investment in new infrastructural projects (“offensive” investments) aimed at the acquisition of market shares and more valuable positions in global logistic chain

12. 'Emerging Multinationals' - Copenhagen, 09-10-2008 The home appliances sector: market and asset-seeking investments The home appliances sector is a mature industry, characterized by a producer-driven global value chain; Chinese firms have built their production capabilities working initially as subcontractors for developed country MNEs; Then, they have been able to develop their own products and brands, initially sold in the domestic market; This has allowed to the domestic firms to acquire some competitive advantages on the basis of whose they have begun their internationalization strategies.

13. 'Emerging Multinationals' - Copenhagen, 09-10-2008 Haier’s European HQ in Varese Acquisition of strategic assets at the level of the firm: technology, human capital, distribution networks; Agglomeration advantages: –Specialized labor market; –Specialized suppliers of components and parts; –Specialised knowledge on markets and technologies.

14. 'Emerging Multinationals' - Copenhagen, 09-10-2008 The ‘pure’ strategic asset- seeking investments Automotive companies in Turin (Anhui and Changan): R&D and design centers; Acquisition of technology and brand: Quianjiang-Benelli (motorcycle producer); Brands: Hembly-Sergio Tacchini (sportswear), Xinyu Hengdel Group-Omas (luxory goods).

15. 'Emerging Multinationals' - Copenhagen, 09-10-2008 Preliminary considerations Evidence is still scarce, only few key operations Pattern of entry in Italy similar to other main European countries; However, Italy holds some distinctive comparative advantages: e.g. economies of agglomeration in traditional sectors....but also some distinctive disadvantages in attracting FDI – high bureaucracy and restrictive policy on visa concession

16. 'Emerging Multinationals' - Copenhagen, 09-10-2008 Preliminary considerations Italy’s manufacturing model – built largely on SMEs – has proven vulnerable to Chinese competition Chinese FDI, in perspective, may provide some benefits to domestic economic system: –Focus on strategic competitive advantages; –Fresh capital; –Sale networks; –Access to rapidly increasing global Asian market.

17. 'Emerging Multinationals' - Copenhagen, 09-10-2008 Research on the field Nonetheless, more first-hand information is needed to answer basic questions as: –At the country level: Does the pattern of Chinese investment in Italy differ from other European destinations, if so why? Does the pattern of Chinese investment differ from other investors to Italy, if so why? –At the local level: How do Chinese investors enter into local linkages? What is the impact (threat or opportunity) of the Chinese presence on the local cluster? –At the firm level: Are Chinese subsidiaries in Italy building up competences? How dothey transfer within the company these competences acquired locally?