Abstract

Weak rule of law, corruption and political risk are factors found to deter foreign direct investment (FDI) and all are characteristics of Cambodia’s investment environment. Yet Chinese outward FDI has been found to contradict these general trends, as illustrated by high levels of Chinese investment in Cambodia. This article analyses how Chinese firms are able to successfully invest in Cambodia and finds that variation in ownership type (state owned or private), investment size and the degree of mobility of the assets invested determine the Chinese investor’s strategy. For China’s state owned enterprises (SOEs) in the hydropower sector, Chinese government support in the form of aid and loans to the government of Cambodia secures approval and protection for investments. Private Chinese firms with smaller and more mobile investments in Cambodia’s garment industry, on the other hand, rely on industry-wide collective action facilitated by cultural and linguistic ties both to other ethnically Chinese foreign investors and to Chinese Cambodians in the industry. Finally, in the land and resource sector, Chinese firms secure a politically connected local stakeholder to gain approval and protection for large investments.

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Additional Information

ISSN
1793-284X
Print ISSN
0129-797X
Pages
pp. 173-205
Launched on MUSE
2014-09-25
Open Access
No
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