The Limits of Guanxi for Chinese Nationals Doing Business Abroad: Empirical Investigation into Chinese Companies in Germany

In the last ten years, Chinese outward direct investment (CODI) has undergone dramatic development. It has become increasingly important on the global stage. This paper attempts to integrate the guanxi concept into the Uppsala internationalisation process model to explain CODI motivation, location choice and knowledge acquisition channels. It reveals that Chinese investment in Germany is mainly driven by the desire to explore markets and to search for strategic resources. It favours location rich in network resources. Guanxi acts as an important channel of knowledge acquisition, but it is not as important as contractual linkage because of the limited professional and industry-related knowledge in the local Chinese community. Chinese capitalism has been shaped into a hybrid form that incorporates both modern corporate management and traditional guanxi utilisation. Research which ignores or overemphasises the role of guanxi could lead to an incorrect understanding.