‘Rushing in where angels fear to tread?’: the early internationalisation of indigenous Chinese firms

China offers an interesting, but unfortunately neglected, case study of international entrepreneurship. This paper empirically investigates the early international entrepreneurship of indigenous Chinese firms using data on 3,948 firms surveyed by the World Bank in 2002-03.

The author finds important differences in the extent and motivation of early internationalisation between indigenous and foreign-invested Chinese firms. Despite having started with internationalisation relatively more recently than most foreign-invested firms, and despite having much less least foreign experience than foreign-invested firms, indigenous firms who internationalise early were found to perform better than foreign-invested firms. They may be ‘rushing in’ to international markets, but so far this seems to be paying off quite well.

Other key findings include:

• the degree of foreign experience has a negative impact on the internationalisation decision - an improved understanding of the situation of foreign firms, which are generally more internationalised, may have a sobering effect on indigenous firms
• internationalisation is a complex, risky process, and that although internationalised firms may expect higher sales growth, this might involve a tradeoff with the chances of firm survival
• indigenous Chinese firms were found to achieve higher sales and employment growth than foreign-invested firms when they internationalise early, even though their productivity is lower, given that one controls for other possible determinants of sales and employment growth
• indigenous Chinese firms, after years of being restricted to the domestic market, are now successfully exploring profitable opportunities abroad.