Local integration and co-evolution of internationalizing Chinese firms

This study investigates the integration of internationalizing Chinese firms into local host markets. We explore the market-driven investment of a new wave of Chinese private and local state-owned firms in Australia since 2012, which has replaced the initial large-scale investment in resources by central state-owned enterprises. Using an in-depth analysis of nine Chinese firms operating in various sectors of the Australian market, we argue that market integration, adaptation, and bilateral institution-building through co-evolution and empowerment of local subsidiaries of Chinese multinational enterprises results in entrepreneurial autonomy and characterizes a new generation of Chinese investors. We propose that Chinese multinational subsidiaries have transferred domestic practices to the Australian market and have reconfigured domestic and host market resources to gain a competitive advantage in their original investment industry and new industries. Our study advances middle-range theory building and provides a practical understanding of the strengths and weaknesses of Chinese investors, their potential to disrupt local markets, and their responsiveness to market-oriented institutional guidance. The results of this study suggest that the bilateral institution-building and resource reconfiguration capabilities of Chinese enterprises can be transferred to other developed and developing markets, including Belt and Road Initiative countries.