Chapter 15: Diplomacy in a Challenging Geopolitical Landscape: Impact on Chinese Multinational Corporations Available to Purchase

The current geopolitical environment is increasingly characterized by frictions and tensions among countries and blocs, thereby raising state interventionism and protectionism measures. Consequently, interstate relations have a growing influence on the strategic decisions of multinational corporations (MNCs). Within this new global landscape, diplomacy is gaining momentum as a tool to alleviate the uncertainties faced by companies when doing business abroad. This chapter addresses the impact of the diplomatic initiatives of China’s government on the location choice of cross-border investments by Chinese MNCs. The findings of the empirical research suggest that diplomacy matters, namely, that diplomatic activities contribute to creating a friendlier environment in the host country that favours location decisions. Furthermore, some diplomatic initiatives can be considered substitutive tools to mitigate the challenges of the evolving geopolitical setting of international business.