1: Introduction

Context and Background

China's fast-growing economy has been acknowledged globally (Liang, Lu & Wang, 2012). One of the major factors contributing to the rapid economic growth is internationalisation of Chinese enterprises. As a result, this trend has drawn the attention of researchers in the past two decades (Liang, Lu & Wang, 2012). According to Yeung and Olds (2016), most scholars have conducted research to determine the factors driving internationalisation of Chinese enterprises. However, the challenges facing internationalisation of Chinese firms have received little scholarly interest (Liang, Lu & Wang, 2012).  According to Buckley (2016), the main challenges facing Chinese multinational enterprises include conflicting policy objectives, ineffective strategies, liability on foreign resources and inadequacy of managerial skills. Notably, Lu et al. (2015) argue that although most studies recognise the existence of conflicting policy goals, there is limited empirical research on internationalisation regulations of Chinese enterprises. According to Wei, Clegg and Ma (2015), the government of China has offered considerable support towards internationalisation of Chinese companies. However, this support has acted as an entry barrier to some countries, which have conflicting goals with the Chinese government. Besides, Zheng et al. (2016) observe that in China, the approval process of cross-border projects is still slow. According to Lu et al. (2015), bureaucratic procedures in approval of international projects can cause companies to lose investment opportunities. Accordingly, Ge and Wang (2013) argue that the existing laws and regulations for internationalisation of Chinese enterprises do not allow companies to meet the changing market demands.  Therefore, to enhance the competitiveness of Chinese firms in the international market, the government of China should review its policies.

Aim of the Study

As pointed out in the discussion above, Chinese enterprises face policy constraints when investing in foreign countries. To overcome these policy constraints, CEOs (Chief Executive Officers) of Chinese companies adopt various strategies. One of these strategies is the formation of alliances with foreign firms (Yeung & Olds, 2016). In spite of this strategy, Chinese firms continue to face challenges.  Accordingly, this research aims to explore the policy and strategy challenges facing internationalisation of Chinese enterprises. By studying these constraints, the research will contribute to the literature on internalisation of Chinese enterprises. Moreover, the study will offer valuable recommendations for improving internationalisation policies in China.  Furthermore, the research will reveal the deficiency of CEO strategies in forming international alliances and propose appropriate recommendations.

The objectives of the study are:

• To establish factors leading to internationalisation of Chinese enterprises
• To establish strategy and policy constraints that Chinese enterprises face locally and internationally
• To establish how Chinese government policies can be improved
• To recommend changes in  CEO strategies and government policies that can facilitate the internationalisation process of Chinese enterprises

Chapter 2: Literature Review

Factors Leading to Internationalisation of Chinese Enterprises

There are various factors driving the internalisation of Chinese firms. These factors are similar to those leading companies in developed countries to invest overseas, although there is a slight variation (Benn, Dunphy, & Griffiths, 2014). According to Zheng et al. (2016) and Wei, Clegg, & Ma (2015) one of the factors motivating enterprises from China to invest overseas is to secure international markets. Additionally, Chinese firms seek to expand their distribution networks and secure a competitive advantage in global supply chains. Moreover, Chinese enterprises aim to access cheap labour from developing countries and, therefore, reduce production costs. Besides, Lu et al. (2014) point out that stiff competition in the domestic markets drives Chinese multinationals to seek overseas market where they can obtain markets easily.  Furthermore, Lu et al. (2015) state that most state-owned Chinese companies internationalise to obtain a constant supply of natural resources such as minerals and oil.

While the objectives of securing markets, obtaining natural resources, reducing production and avoiding stiff competition from local competitors apply to other developed countries, China has unique motivating factors. One of these factors is to obtain modern technologies from developed countries. Moreover, Wei, Clegg and Ma (2015) state that Chinese firms purchase or