Multinational Investment Projects in the Petrochemical Industry in China

Purpose The paper discusses the new concept of ‘Multinational Investment Projects’ (MIPs) and its application in the context of international business operations in China. The petrochemical industry in China is used as the industrial context in which we investigate the interplay between the Chinese government, which encourages growth and investment activities in the sector, and the multinational petrochemical firms competing for global market share in this sector. Design/methodology/approach We investigate the nature of the petrochemical value chain and the investment activities in all of its segments. Using an originally created database of the top 180 multinational investment projects in the petrochemical industry in China and additional context information the business environment in China, we review the investment strategies of multinational petrochemical corporations, and discuss their strategic choices for mode of entry in China, geographic location, and location within the value chain. Findings The overview of multinational investment projects in the Chinese Petrochemical industry confirms the theoretical expectations of the critical impact of Chinese Government policies. We explain the emerging shape of international competition in this sector of the Chinese economy. Originality/value The main contributions of this paper are the new conceptual framework for analysis of the drivers for strategic investment choices, the assembly of a database with the top 180 multinational investment projects in the petrochemical industry in China, and the analysis of the relationships between the regional endowments, concentration of value-chain activities and location choices by multinational firms from different countries of origin. Our results demonstrate the factors that drive growth in a knowledge-intensive, technology and capital intensive sector.