A comparative analysis of the role of the state in Chinese, Japanese, and Korean investment in the EU

Abstract

Chinese outward foreign direct investment (COFDI) in the European Union (EU) has recently attracted much attention. However, we cannot thoroughly understand the case of COFDI in the EU unless we compare it with other countries’ foreign direct investment (FDI). Japanese and Korean firms, including the keiretsu, and chaebol, are also quite active worldwide, including in the EU. The East Asian countries mirror the global power shift to the Asia Pacific and the challenges the EU faces concerning this development. This article examines the home state’s role in each of the three East Asian countries by focusing on how the Japanese, Korean and Chinese states supported their respective firms’ investments into the EU. It shows that COFDI in the EU substantially differs from its Asian counterparts due to its state-firm link, including ownership, policy support, and subsidies. Beijing also differs from Tokyo and Seoul because of its economic statecraft.