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How Does the Belt and Road Initiative Affect Transformation and Upgrading of Chinese Enterprises

By Li Jun, Gan Jinyan and Yang Xueru

The Belt and Road initiative is one of the most important policy circumstance for Chinese enterprises' outward foreign direct investment as well as their transformation and upgrading strategies. Since issue of the Belt and Road initiative, the scholars also implemented some research to it. The existing research mainly focuses on its effect on export trade and outward foreign direct investment, which are based on the macro level and quasi-macro level. Yet, not much is known about its effect on the enterprises' strategic decisions. Based on a case study to four Chinese enterprises, this paper found that, the Belt and Road initiative exhibited both push and pull effect to Chinese enterprises. The push effect mainly comes from competitive pressure of the market, the government, the media as well as the stakeholders. The pull effect is mainly displayed by new market opportunities, the decreasing fixed cost of export, the decreasing marginal cost of export, the diminishing investment barriers and the changing financing cost. With the implementation of the Belt and Road initiative, its push and pull effect becomes more significant. The Chinese enterprises fulfill their transformation and upgrading by re-identifing opportunities from new region and new industry, or reconstruction of global value chain. They developed three representative routines of transformation and upgrading, i.e., regional transfer strategy both in domestic and foreign market based on their management revolution ability, trans-industry transformation applying their entrepreneurship capacity, integration strategy of creating their own value chain based on innovation and market ability. Furthermore, transformation and upgrading opportunities for enterprises are the outcomes of both external environmental changes as well as internal resources and abilities. For different kinds of enterprises, such as state-owned enterprises and private enterprises, the push and pull effect of the Belt and Road initiative exhibit different characters. They themselves also possess different resources and abilities. Therefore, they can identify and develop different opportunities. Our case study also found that the Belt and Road initiative showed moderate influence to the transformation and upgrading strategies in private enterprises and there is no trans-industry transformation in this kind of enterprises. Our study makes some contributions to the existing literature. It helps lay the ground for the research to outward foreign investment effect of the Belt and Road initiative from the micro level. It clarifies the theoretic mechanism on how the Belt and Road initiative affects the routine of transformation and upgrading for Chinese enterprises. Furthermore, our study provides reference for Chinese enterprises to choose an appropriate routine and effectively promote transformation and upgrading in this new era.


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