Chinese Firm Internationalisation – Chinese Firms’ Foreign Direct Investment (FDI) in the Kingdom of Saudi Arabia

Abstract

This research explores how Chinese state-owned firms invest in Saudi Arabia’s construction sector, focusing on the strategic motives, coordination models, and local development implications of their foreign direct investment (FDI). Drawing on a multi case study approach involving four major Chinese firms, the research studies firms’ behaviour within a dual-state policy context, shaped by China’s Belt & Road Initiative (BRI) and Saudi Arabia’s Vision 2030. The findings reveal that investment decisions are influenced by a combination of market-seeking and state-guided motives, with firm coordination governed by a value-threshold logic. While bilateral policy alignment enables entry, the developmental impact of the FDI such as localization is primarily driven by host-country regulations. The study contributes to international business literature by challenging the assumption that Chinese FDI is either market-driven or state-led, offering instead a policy alignment model that captures the layered interactions between home- and host-country institutions and firm strategy.