Chinese migrant entrepreneurs in Budapest: changing entrepreneurial effects and forms
| Pages | 61-76 |
| DOI | https://doi.org/10.1108/15587891111100804 |
| Date | 18 January 2011 |
| Published date | 18 January 2011 |
| Author | Loong Wong,Henriett Primecz |
| Subject Matter | Strategy |
Chinese migrant entrepreneurs in
Budapest: changing entrepreneurial
effects and forms
Loong Wong and Henriett Primecz
Abstract
Purpose – This paper seeks to explore the migration dynamics that have characterized Chinese
immigration in Budapest and the migrants’ understanding of their own position in relation tothe Chinese
diaspora. The paper also aims to discuss the interaction of the local economy and resources of the
Chinese migrants to form viable network communities.
Design/methodology/approach – The ideas of market embeddedness and the critical role of market
opportunities are critically evaluated in the context of local practices. The paper seeks to show that the
‘‘new’’ entrepreneur is an active and creative social actor able to utilize, mobilize and control resources
in different countries to achieve business opportunities and growth for him/herself.
Findings – It is shown that globalization has spawned ‘‘new’’ transnational spaces and enabled migrant
Chinese entrepreneurs to thrive and grow their businesses. This is a new trend and clearly suggests that
a qualitatively different migration trajectory is evolving; and theoretically, analysts of globalization and
entrepreneurial development have to better account for the different trajectories of entrepreneurial
forms.
Originality/value – The paper suggests that this ‘ ‘new’’ migrant entrepreneurship trend is qualitatively
different and marks a ‘‘new’’ development and it is a consequence of economic globalization and the
transnationalization of business and economic activities.
Keywords Entrepreneurs, Hungary, Chinese people, Economic growth
Paper type Research paper
Introduction
Overseas Chinese firms and their ‘‘worldwide business web’ ’ have been a powerful
economic phenomenon and are considered a growth engine propelling economic growth in
local economies particularly in Southeast Asia. While some has mostly considered bilateral
trade (Rauch, 2001; Rauch and Trindale, 2002); very few, however, examined foreign direct
investment (FDI) (Tong, 2005) and the synergistic effects on the creation of overseas
business networks (Chung, 2004; Zhao and Hsu, 2007). However, it is reasonable to think
that, as migrants’ links influence the choices of firms regarding trade, they can also affect
their investment abroad. According to Markusen (2002), the investments of multinationals
are of two main kinds: either they are made with the purpose of selling the same goods sold
at home abroad (horizontal FDI) or of saving production costs (vertical FDI). In both cases,
there are fixed and variable costs associated to the investment. More generally, it can be
thought that these costs are influenced by the existence of informal barriers that impede
entry into foreign markets, similar to the informal barriers to trade that are described by the
literature on networks. These ‘‘barriers’’ involve ignorance of economic opportunities, foreign
suppliers, consumption and production conditions and distribution channels. As for trade,
entry is more difficult when countries are distant, not only geographically, but also culturally
and institutionally. The presence of immigrants at home and emigrants abroad can lower
these informal barriers, and with them the threshold above which entry is profitable (Chen
and Chen, 1998; Chung and Enderwick, 2001; Rauch and Trindale, 2002; Chung, 2004;
DOI 10.1108/15587891111100804 VOL. 5 NO. 1 2011, pp. 61-76, QEmerald Group Publishing Limited, ISSN 1558-7894
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JOURNAL OF ASIA BUSINESS STUDIES
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PAGE 61
Loong Wong is based in the
Department of Business
and Government at the
University of Canberra,
Canberra, Australia.
Henriett Primecz is based
at Corvinus University,
Budapest, Hungary.
Zhao and Hsu, 2007). In other words, migrants’ networks can boost bilateral FDI.
Furthermore, their existence may turn out to be especially important for small firms, which
typically face the highest difficulties investing abroad, and, in the aggregate, for countries,
such as China, where there is a large number of small and medium sized firms.
In this paper, we examine this ‘‘immigrant effect’’ in facilitating the internationalization and
entry of Chinese firms into Hungary and central Europe. We start off with a discussion of
migratory flows of the Chinese into Hungary. Hungary was particularly significant; it served
as a base and launch-pad for further Chinese migration into Eastern Europe and other parts
of Europe. In our study, we argue that these ‘‘new migrants’’ are active entrepreneurs
seeking new market opportunities and many have served local market needs. It explores the
development and nature of newly created Chine se enterprises by examining the
opportunities arising from ‘‘structural holes’’ in the economy. We also draw on the concept
of mixed embeddedness as the crucial connection between social, economic and cultural
contexts from which migrant enterprises emerge and into which they are embedded
(Kloosterman and Rath, 2001). The analysis suggests that there is no one singular form of
Chinese migrants’ entrepreneurship. They are instead heterogeneous and reflect the
entrepreneurs’ social network, culture and exogenous conditions. The rest of the paper
explains the theoretical framework employed followed by a discussion on the nature and
development of Chinese enterprises in Budapest. In our analysis and conclusion we revisit
Pieke’s et al. (2004) conceptualization of the Chinese globalization and argue that the
Chinese in Budapest provide an excellent example of a model of dynamic social spaces that
is embedded in a regional system that simultaneously forms part of a unifying global system.
We suggest that this ‘‘new’’ migrant entrepreneurship trend is qualitatively different and
marks a ‘‘new’’ development and is, we argued, a consequence of economic globalization
and the transnationalization of business and economic activities.
Why do the Chinese emigrate?
Recent emigration from China has grown to unprecedented levels since the onset of
economic reforms in 1978 and the liberalisation of emigration legislation in 1985 (Xiang,
2003). In 1985, the Chinese government passed a new emigration law, which grants ordinary
citizens private passports as long as they can provide invitation letters and sponsorships
from overseas. In so doing, emigration becomes a matter of citizens’ individual right, an area
of service rather than control. In 1984, China opened 14 coastal cities to overseas
investment. Export-oriented enterprises and private economy are encouraged in these
places and bureaucratic interference from Beijing was further cut back. Almost all the major
emigration places are close to these port cities. Apart from the historical migrant networks,
developed private economies in these places provide more means of capital mobilization for
emigration, and also pushed the poor, the relatively impoverished, to emigrate. The
remarkable economic success of the coastal areas has led to the view that rigidly following
central government policies will not be conducive to local development.
Emigration by unlawful means became part of local development strategies and therefore,
accorded certain legitimacy. Yet it is important to stress that local governments’ promotion of
emigration does not necessarily increase illegal exit. Thunoe and Pieke (2005) found in their
study that emigration from the area where there is government support tends to be more
orderly and is less penetrated by ‘‘snakeheads’’ (human smugglers) (Thunø and Pieke,
2005). Apart from the coast line, land border also became vibrant zones for international
trade and migration.
Since the late 1980s, bianmao (border trade) has become a booming business. A few towns
in the provinces of Heilongjiang, Jilin and Inner Mongolia bordering Russia were pioneering
areas in bianmao. This led to growing border shuttle trade and emigration to Eastern and
Central Europe. Since 1989, Central and Eastern Europe countries have become not only
zones of transit, but also areas of settlement for new Chinese migrants (Pieke, 2002). This
was made possible by periods of liberal visa policies in some of these countries (Nyı
´ri, 1998;
Moore and Tubilewicz, 2001). At the end of 1980s, Hungary, trying to win Chinese friendship
in advance of the Sino-Hungarian summit meeting scheduled for 1989, allowed all PRC
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