Government Policy and the Competitive Advantages of Foreign-financed Firms in Guangdong Province of Southern China

Authors: Yeung G.¹; Mok V.²

Source: Asian Business & Management, Volume 1, Number 2, 1 August 2002 , pp. 227-247(21)

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Abstract:

This paper investigates the impact of various Chinese government policies on the competitive advantages of foreign-financed manufacturing firms in Guangdong province of southern China. The objectives of various government sector-specific policies are to lubricate the factor markets in labour, capital and products and to facilitate the operation of foreign-financed firms. However, the actual effects are often quite different: the ambiguity, complexity and inflexibility of policies impose higher transaction costs on foreign-financed firms. These disadvantages offset some economic benefits gained under the central government's preferential foreign direct investment policy and thus damages the competitive advantages of foreign-financed firms based in Guangdong. Worse still, the lack of co-ordination among various bureaux further hampers arbitration between government bureaux and foreign investors.

Asian Business & Management (2002) 1, 227–247. doi:10.1057/palgrave.abm.9200013

Document Type: Original article

Affiliations: 1: School of Social Sciences, University of Sussex, Falmer, Brighton BN1 9SN, UK. E-mail: g.yeung@sussex.ac.uk 2: Department of Business Studies, Hong Kong Polytechnic University, Hong Kong. E-mail: buvmok@polyu.edu.hk

Publication date: 2002-08-01