The Internationalisation of Mainland Chinese Firms into Malaysia: From Obligated Embeddedness to Active Embeddedness

This paper examines the rationale by which mainland Chinese firms choose their coalition partners in their Malaysian ventures. I explore how, under certain political economic conditions, such cross-border investment and corporate tie-ups can be shaped to meet the Malaysian state’s objectives. I argue that the Malaysian state has enjoyed success in the construction sector by nurturing cooperation between its carefully groomed government-linked companies and mainland Chinese firms. Government-linked companies are useful coalition partners for the mainland Chinese firms because of the crucial role the state plays in creating a largely non-competitive industry that favours government-linked companies. Outside of the construction sector, however, the state has enjoyed markedly less success in fostering cooperation between the mainland Chinese firms and the government-linked companies. Consequently, the mainland Chinese firms possess more bargaining power vis-à-vis the state when they invest in these sectors, enjoying considerable autonomy in the selection of their coalition partners.