New drivers of industrialization and novel aspects of Hungarian-Chinese bilateral cooperation. Chinese foreign investments in Hungary

Abstract

A number of foreign, partly East Asian producers have made investments into Borsod-Abaúj-Zemplén county (Northern Hungary) since the millennium. They have contributed to the renewal of the industrial structure and enlargement of manufacturing capacity. In the past decade, the meaning and significance of Chinese investment in the Miskolc agglomeration has increased. Chinese interests have been concentrated in the dominant, export-oriented branches of the regional economy. The companies (namely, Wanhua-BorsodChem, TenPao, SEG-A, JOYSON, and Chervon Auto) comprise a key and real group of members engaged in Hungarian-Chinese bilateral relations. They represent China’s industrial development and expansion around the world and in Europe, as well as strengthen the high-value-added and technology-intensive market segments in the regional economy. The study includes two main parts. In the early sections, the evolution of Chinese economic development with a special focus on industry and industrialization are introduced, while later the related political measures and initiatives are described. Presenting an understanding of the Hungarian government’s reaction (the so-called New Foreign Economic Strategy) is part of the first half of the paper. The Flying Geese Paradigm is the conceptual frame of the synthesis. The key research question concerns the nature of Chinese economic development: Does the development differ from previous East-Asian models of export-oriented industrialization? The author discusses opinions which consider the Chinese developments to be distinct from other Asianones according to their political and market characteristics. In the second half of the article, the Chinese companies settled in Borsod-Abaúj-Zemplén county are evaluated and their regional-level impacts and national-level lessons are identified and assessed. The listed Chinese investments, which differ in financial and legal forms, have emerged as some of the major employers and producers of the region. These considerable investments have accelerated the process of industrial renewal in key branches, although ultimately increasing the exposure and vulnerability of the entire manufacturing structure to external global factors. The Chinese investors are bridging Borsod-Abaúj-Zemplén with diverse regions in China, East Asia. They are generating new results and raising new questions about Hungarian-Chinese bilateral cooperation that represent original experiences and knowledge gain for both sides. This work is an attempt to detail the creation of the cluster of Chinese companies and to draw conclusions about the entrepreneurial background, the main activities, and the stories of the respective Asian parent companies. This research will be continued to support the development and embedding of the enterprises. It is crucial effort, as the latter are not only now present but essential for Borsod-Abaúj-Zemplén and Hungary as well.