Strenthening the Position of Chinese Automotive Industry in EAEU Countries: Are Direct Investments Important?

Abstract

The automotive industry has long played an important role in the economy, and has repeatedly significantly changed the nature of its internationalization. China has taken the first place in terms of production, but has not yet consolidated its leadership in the export of cars, much less in their production abroad. The withdrawal of many Western investors from the Russian market in 2022–2023 created additional opportunities for the Chinese automotive industry. During the same period, China openly changed the nature of its foreign expansion everywhere. The article examines the automotive industry in the EAEU countries to explore how the distinctive features of Chinese companies’ internationalization are manifested in the post-Soviet space. The analysis contributes to the debate on whether Chinese firms should be viewed primarily as a specific form of traditional transnational (multinational) corporation or as a distinct model of internationalizing business shaped by China’s institutional and political environment. The study argues that China’s model of state capitalism has enabled the international expansion of Chinese companies to be closely linked to broader national economic modernization objectives. Drawing on a methodology previously developed by the author for analysing world economic relations in the post-Soviet space, the article examines the expansion of Chinese automotive companies in the EAEU, with particular attention to developments in Russia following 2022. Chinese automotive companies rapidly expanded their presence in the Russian market as the restructuring of international economic relations created new opportunities for foreign suppliers. At the same time, direct investment, which is traditionally regarded as one of the most advanced forms of internationalization, has played a relatively limited role in this expansion. Instead, market entry has relied primarily on exports and other forms of commercial cooperation, supported by state policies in China that facilitate the international activities of domestic automobile manufacturers, including firms that are not yet prepared to undertake substantial overseas investment. The findings suggest that this pattern may represent an important manifestation of the distinctive character of Chinese business internationalization. Compared with investment-led internationalization by firms from other emerging economies with a strong state role in the economy, the Chinese model appears to combine state support, for international activities and selective foreign investment in a particularly flexible manner. The automotive sector in the EAEU therefore provides an illustrative case for examining how this model operates under conditions of geopolitical and geoeconomic transformation.