Chinese FDI in the Oil Sector : Can they be explained by the prevalent theory on FDI?

by Chorell, Hugo; Nilsson, Emma

China has experienced a phenomenal growth during the last years. With this economicdevelopment comes a great need for energy. Energy to fuel the domestic production. As thedomestic resources in China have shown to be insufficient, one way to get the energydemanded is to go onto the international market. China has, thus, started undertaking FDI inoil to be able to feed the domestic needs. In this thesis we will discuss these investments andinvestigate if prevalent theories on FDI can explain the FDI that have taken place. Ourconclusion is that the FDI undertaken has been resource-seeking investment. Since theChinese oil companies are state-owned and regulated so that they can not act as profitmaximizingfirms, our thesis will show that the Chinese FDI in the oil sector therefore onlypartly can be explained by the theories on FDI.