Determinants of the performance of foreign invested enterprises in China

In this paper, we attempt to uncover the key determinants of the performanc e of foreign invested enterprises (FIEs) in China. The results reveal that cash contributed by foreign parent companies had a significantly positive i mpact on current profitability, but not on subjective performance. There wa s some evidence that foreign management improved subjective performance. Th e duration of operation was a consistently positive factor in the success o f the FIEs in both profitability and subjective performance. FIEs that sold more output to the domestic market performed better, and so did FIEs in in dustries consistent with China's comparative advantages. Unexpectedly, FIEs owned by Hong Kong investors did not perform any better than FIEs owned by other foreign investors and FIEs located in Special Economic Zones (SEZs) performed worse than those located outside of SEZs. (C) 2001 Academic Press .