Dr. Chunyi Lin
Vice-Chairman of Graduate Admission Committee of Limkokwing University
Adjunct Professor of Graduate School of Limkowwing University
E-commerce/Consumer Behavior/ Social Media/ IP Strategy /Innovation and Enterpreneur
Title: E-commerce Research Frontiers and Hot Spots Analysis from the Perspective of ASEAN E-commerce Development
ASEAN has become China's largest trading partner. China-ASEAN is not only an important development area for the “Belt and Road” strategic policy but also an important testing ground for China’s e-commerce to go global to realize the global brand of China’s e-commerce. At present, in the ASEAN region, the practical hotspots and focuses of e-commerce companies are: selection of e-commerce foreign investment regions, mergers, and acquisitions, and local partner decision-making, the establishment of a multinational cashless payment system, integration of multinational logistics systems, and even re-entry into the national test of new retail The research enthusiasm for cross-border e-commerce is mostly concentrated in the following parts: cross-border e-commerce model research, cross-border e-commerce, and foreign trade interaction research, cross-border e-commerce logistics development and the experience and results of exploring pilot areas; cross-border e-commerce Business credit issues, cross-border e-commerce entry strategies, and local new retail strategies, and cross-border e-commerce consumer protection are still potential trends; what are the reasons for the differences in practice and research? The difficulties in collecting research and participating in the research on how to better serve the actual construction and the data collection are worth pondering in business and academia!
Senior Assoc. Prof. Juann Hung
Xi’an Jiaotong-Liverpool University, China
International Finance, Open Macroeconomics, International Trade
Title: Why Is Return on U.S. Outward Direct Investment Better than that on Most Other Countries’ Outward Direct Investment
The return rate on US outward direct investment has not only remained persistently higher than that on foreign countries’ direct investment in the United States, but also higher than the return rate on most other countries’ outward direct investment. From 1980 to 2017, the average return on US outward direct investment assets (ODIA) was 5.1 percent, exceeding that on its inward direct investment assets (IDIA) by 1.2 percentage points. From 1999 to 2017, the average difference between the return rate on ODIA and that on IDIA was 3.7 percentage points for the US, considerably higher than that for Germany (1.1 percentage points), the UK (0.4 percentage points), and Japan (-1.6 percentage points).
Why has the return on US ODIA persistently exceeded that of other countries’ direct investment in the United States? Researchers have offered several theories to explain this phenomenon. The three most popular hypotheses are as follows:
(1). The age-effect hypothesis: Foreign-controlled multinational corporations (MNCs) in the US are less profitable than are US-controlled MNCs abroad because the former are more newly established, and it takes times for new investment to turn a profit.
(2). The income-shifting hypothesis: The return gap favoring USODIA is the net result of US-controlled MNCs’ shifting profits through transfer pricing to minimize their overall tax cost.
(3). The risk-compensation hypothesis: USODIA requires a higher return to compensate for the higher risk of investment in foreign countries than in the US.
In this paper, we offer an additional hypothesis derived from the internalization theory of FDI, the internalization-effect hypothesis. This hypothesis maintains that the return of US-controlled MNCs receives a boost from new investment abroad because they stand to gain from internalizing markets for their ownership of firm-specific assets —including advanced technological knowhow, management and marketing expertise, and brand-name reputation, etc.
We use data of 49 countries from 1994 to 2013 test the internalization-effect hypothesis, along with the three popular hypotheses described above. We conduct panel regressions to estimate the equation of return on USODIA and the equation of return on USIDIA separately. On the USODIA side, we find empirical support for the internalization-effect hypothesis, the income-shifting hypothesis and, to a lesser extent, the risk-compensation hypothesis. There is no empirical support for the age-effect hypothesis, likely because its negative effect is dominated by the positive internalization effect. On the USIDIA side, we find that there is strong empirical support for the age-effect hypothesis, which appears to have dominated any possible positive internalization effect.
Our findings suggest that the main sources of US outward direct investment’s return-generating advantage lies in the much stronger internalization effect of US-controlled MNCs’ direct investments in foreign countries.