n Journal of Contemporary Management - Foreign direct investment of Chinese owned small and medium enterprises - motives for choosing South Africa

Volume 8, Issue 1
  • ISSN : 1815-7440



South Africa's social-economic goals are to reduce inequalities, wealth and asset gaps between rich and poor, halve unemployment by 2014 and meet the Millennium Development Goals. A possible approach to achieving these goals is by encouraging more foreign direct investment (FDI) in the small and medium enterprises (SMEs) sector as these investment injections could positively impact the South African economy. The purpose of this paper is to investigate the motives of Chinese owned SME) in the Free State province for starting a business in South Africa, focusing on whether their FDI decisions were driven by exportoriented or market-driven factors. The population for the study comprised of a mixture of Chinese SMEs from different industries. The questionnaire designed through detailed literature studies was answered by 96 entrepreneurs and the data analysed using descriptive statistics, and frequency distribution tables. The results revealed that Chinese SMEs are predominantly market-driven in their decision to invest in South Africa with only 34.4% of the respondents in manufacturing. However, the Chinese SMEs in manufacturing create four times as many jobs as those not in manufacturing and are much more involved in export activities. The paper links the initial motives for FDI of Chinese SMEs to their contribution to the South African economy.

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