Entry strategies of foreign real estate investors in China - Case study of Hutchison Whampoa, ING and CapitaLand

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School of Engineering | Master's thesis
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Date

2010

Department

Maanmittaustieteiden laitos

Major/Subject

Kiinteistöoppi

Mcode

Maa-20

Degree programme

Language

en

Pages

vii + 82 + [2]

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Abstract

Foreign investment in China's real estate market has lasted the two decades and many Chinese academics focus on the appropriate policy to regulate the foreign real estate investment. The aim of this study is to investigate the entry strategies by the foreign real estate investors and attempt to analyse the reasons of their entry modes in China. In the range of legalization, the permitted entry modes in China for foreign real estate investors include Wholly Foreign-owned Enterprise (WFOE), Equity Joint Venture (EJV) and Cooperative Joint Venture (CJV). Although foreign investors may use the direct and indirect investment vehicles to invest in Chinese real estate projects, their entry strategies are very different because there are some reasons behind their choice. It may be the cultural difference or legal restrictions or other reasons. The study agrees the foreign investors may be classified into three groups according the geographic differentiation by a few Chinese academics. For the sake of in-depth study, the research takes three representative cases which stand for these groups. Three subjected foreign investors are Hutchison Whampoa Property from Hong Kong, ING from the Netherland and CapitaLand from Singapore. During the investigation in these three companies, it helps to configure the entry models of three companies and discover the differences of them. The analysis framework for the subjected companies is based on Comparative Advantages theory and Ownership, Internalization and Location Advantages theory (or OLI model). After the qualitative analysis of available evidence and interview with the interrelated people, it reveals the reasons of foreign investors investing by their entry modes. Considered the trade-off of the risk and the benefit, cultural distance, legal stability and preferential policy are the important external factors for foreign investors to choose the appropriate entry modes. But the real estate fund investors, the internal factors such as the nature of the investors decides the firm tending to apply CJV rather other modes.

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Supervisor

Viitanen, Kauko

Thesis advisor

Falkenbach, Heidi

Keywords

real estate, foreign investors, real estate investment, foreign entry mode

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https://urn.fi/URN:NBN:fi:aalto-2020122357971

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[dipl] Insinööritieteiden korkeakoulu / ENG