CREC7‘s infrastructural investment in the DRC : an in-depth study of the motives for Chinese outward FDI

Van Der Lugt, Sanne (2011-12)

Thesis (MA)--Stellenbosch University, 2011.

Thesis

ENGLISH ABSTRACT: The purpose of this Masters‘ thesis was twofold, namely, to contribute to a more holistic approach of the study of the motives of Chinese overseas investors and, secondly, to contribute to the adjustment of general FDI theory in such a way that it becomes more suited to the study of the motives of investors from any country of origin. FDI scholars who study emerging markets argue that general FDI theory needs to be adjusted because most of its theories are derived from studying outward FDI in an Anglo-Saxon context. The theories are therefore not necessarily applicable to investors from a non-Anglo-Saxon context. Furthermore, the study of the motives of foreign investors is of importance to policy makers of FDI host countries in order to create a balance between attracting FDI by deregulating, and controlling FDI by enforcing strict laws and regulations, thereby harnessing the full potential of incoming FDI. Therefore, the model that Lee (1966) developed in migration theory was introduced to FDI theory and tested by applying it to the case of the infrastructural investments in the DRC of a subsidiary of CREC, the world‘s largest contractor, namely CREC7. The main factors that influence the motives of CREC7 were investigated using the Four Factors Model, an adjusted version of Lee‘s model. A single-case study design was chosen in order to shed light on certain dynamics – in particular, the interrelation between the particular firm-specific, push, pull and intervening factors that influence CREC7‘s motives to invest in the DRC. In order to maximise the validity of this study, multiple sources of evidence were used, namely: documentation, face-to-face interviews and direct observations, the latter two of which occurred during August 2010. Lee‘s (1966) model indeed appeared to be useful for identifying the main factors that influence the motives of CREC7 for investing in the infrastructure sector in the DRC and the interrelatedness of these factors. The collected data from the desktop research and the fieldwork showed how conditions in the country of origin, conditions in the country of destination, firm-specific factors, and intervening factors influence each other in a highly complex way. In order to illustrate this complexity, the factors that influence each other most actively were grouped together in clusters. The two clusters of factors that were of specific importance for CREC7‘s decision to invest in the DRC, are: (1) relationship with the central government, access to finance, experience and skills, market access, and intervening factors; (2) experience and skills, experience of operating in a challenging institutional environment, high level of competition in the domestic market, high demand for infrastructure in the DRC, and the relatively low level of competition in large infrastructure projects in the DRC. Because the Four Factors Model uses broad categories of factors that apply to all foreign investors, this model can be applied to the study of the motives of foreign investors from both developed and developing countries, thereby contributing to make general FDI theory more relevant.

AFRIKAANSE OPSOMMING: Die doelstelling van dié Meesterstesis is tweevoudig. Eerstens, om `n meer holistiese benadering tot die studie van die motiewe van Sjinese buitelandse beleggers by toe te voeg en tweedens om by te dra tot die aanpassing van algemene direkte buitelandse beleggings teorie dat dit meer bruikbaar vir die studie van die motiewe van beleggers, onafhanklik van hulle land van herkoms, kan wees. Algemene direkte buitelandse beleggings moet aangepas word aangesien meeste van die teorie ontwikkel is deur uitwaartse direkte buitelandse beleggings binne `n Anglo-Saxon konteks. Die studie van die motiewe van buitelandse beleggers is ook belangrik vir beleidsmakers aan die ontvangkant van direkte buitelandse beleggings aangesien `n balans tussen deregulasie met die doel om buitelandse beleggings aan te lok en direkte buitelandse belegging te reguleer deurmiddel van streng wetgewing en sodoende die volle potensiaal van direkte buitelandse belegging te ontsluit. Sodoende is die model wat Lee (1966) ontwikkel het in migrasie teorie toegepas op direkte buitelandse beleggings teorie en getoets op infrastruktuur beleggings in die Demokratiese Republiek van die Kongo (DRK) deur CREC7 `n vleuel van die grootste kontrakteerder CREC. Die hooffaktore wat CREC7 beïnvloed is ondersoek deurmiddel van die Four Factors Model, `n aanpasing van Lee se model, gebruik te maak. `n Enkele gevallestudie was gebruik om lig te werp op sekere verwikkelinge veral die interverhouding tussen verskeie faktore spesifieke tot die maatskappy en die mark wat werk op die beleggingsmotiewe van CREC7 in die DRK. Om die geldigheid van hierdie studie te maksimeer is verskeie bronne gebruik. Naamlik dokumentasie asook onderhoude en direkte observering tydens Augustus 2010. Lee (1966) se model was bruikbaar gewees vir die identifisering van die hooffaktore wat CREC7 se motiewe om te belê in infrastruktuur in die DRK beïnvloed asook die interafhanklikheid tussen hierdie faktore. The versamelde data het geïllustreer hoe omstandighede in die land van oorsprong, die land van ontvangs en omstandighede spesifiek tot die firma mekaar beïnvloed in `n baie komplekse manier. Om die kompleksitieit te illustreer is die faktore wat die meeste op mekaar inwerk in clusters gegroepeer. Die twee clusters wat die meeste op CREC7 se beleggingsbesluit ingewerk het is: (1) verhoudinge met die sentrale regering, toegang tot bevondsing, ondervinding en vaardighede, marktoegang en ingrypende faktore; (2) ondervinding en vaardighede, ondervinding om in `n uitdagende institutionele ongewing, hoë vlakke van kompetisie in die plaaslike mark, hoë aanvraag na infrastruktuur in die DRK. Aangesien die Four Factors Model breë kategorieë van fakore wat van toepassing is op alle buitelandse beleggers kan die model toegepas word op die studie an motiewe van buitelandse beleggers van ontwikkelde en ontwikkelende lande en sodoende daartoe bydra om direkte buitelandse belegging teorie meer relevant te maak.

Please refer to this item in SUNScholar by using the following persistent URL: http://hdl.handle.net/10019.1/17782
This item appears in the following collections: