Article
Accessing the Impact of FDI Goals on Risk Management
Strategy and Management Performance in the Digital Era:
A Case Study of SMEs in China
Hengbin Yin 1, Muhammad Mohsin 2,*, Luyao Zhang 3, Chong Qian 1 and Yan Cai 1
Citation: Yin, H.; Mohsin, M.;
Zhang, L.; Qian, C.; Cai, Y.
Accessing the Impact of FDI Goals
on Risk Management Strategy and
Management Performance in the
Digital Era: A Case Study of SMEs in
China. Sustainability 2022, 14, 14874.
https://doi.org/10.3390/su142214874
Academic Editor: Esmaeil Zarei
Received: 10 October 2022
Accepted: 9 November 2022
Published: 10 November 2022
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Licensee MDPI, Basel, Switzerland.
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Attribution (CC BY) license
(https://creativecommons.org/license
s/by/4.0/).
Sustainability 2022, 14, 14874. https://doi.org/10.3390/su142214874
1 School of Finance and Trade, Wenzhou Business College, Wenzhou 325035, China
2 School of Digital Commerce, Zhejiang Yuexiu University of Foreign Languages, Shaoxing 312000, China
3 School of Business, Hanyang University, Seoul 04763, Korea
* Correspondence: 20201741@zyufl.edu.cn; Tel.: +86-15858557931
Abstract: COVID-19 has impeded the internationalization of enterprises and sustainable digital
economic growth. This situation has led to enterprises adopting divestment strategies to deal with
multiple risks. However, the successful implementation of strategies depends on understanding
the perceptible risks. Due to risk management failures or unexpected risks, strategic management
has attributed withdrawal to production costs or marketing, but risk management has never ad-
dressed it. Moreover, small enterprises are more vulnerable to risks than large ones. For the first
time, this study fills a gap in the literature by combining Dunning’s investment motives theory
with the COSO risk management process theory to examine small enterprise risk perception in
China. China has seen a growing number of foreign direct investment (FDI) withdraw. Different
risks should have been faced and managed if these were determined to be efficiency-seekers or
market-seekers. This research context led to a survey of 498 FDIs, including market-seeking or ef-
ficiency-seeking types, to identify perceived risk, managed risk, and value risk outcomes. The
Statistical Package for the Social Sciences (SPSS) 18.0 program was used for frequency analysis of
general characteristics and exploration of factor analysis, whereas, Analysis of Moment Structures
(AMOS) 18.0 was used to perform a confirmatory factor analysis and develop a structural equation
model. The obtained results indicate that market efficiency-oriented enterprises can modify their
strategies by implementing digital transformation and localization strategies. In contrast, produc-
tion efficiency-oriented enterprises will divest because of risks, without finding a better strategy.
Keywords: FDI; risk management strategy; investment motives; digital transformation; divestment
1. Introduction
China is proposing a dual circulation economic development strategy to cope with
the complexity of global economic, political, cultural, and security issues by relying
mainly on the domestic sector and bolstering the international sector [1]. This new dual
circulation model combines domestic and international double circulation with a key role
in the international sector. Foreign investment and global trade have therefore become
increasingly important to China. For instance, local governments in the Yangtze River
Economic Belt actively assist small and medium foreign trade enterprises affected by the
epidemic by reducing taxes and rent costs and subsidizing operating costs [2].
The prior literature focused on traditional financial risks when it came to foreign
direct investment (FDI) in China. However, the domestic market in China has changed in
recent years. A rise in labour costs and the evolution of digitalization has challenged the
traditional enterprise operating model. In digital transformations, manufacturing re-
sources are reorganized and value is created for customers by connecting digital tech-
nology and traditional production methods [3]. The COVID-19 shock led to new busi-
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Sustainability 2022, 14, 14874 2 of 20

nesses adopting online sales systems and electronic information systems, as well as
moving their operations online [4]. In addition to the negative impact of COVID on the
economy and the Sino–US trade war, the Russia–Ukraine war and other events make the
international situation more complex. The main risk factors faced by transnational en-
terprises in China are different from those in the past. The existing literature on the risk
perception of FDI in China under the changing situation needs to be updated urgently.
Moreover, there is a paucity of research on the current management performance of
various risks and the priority of risk management in the future. This study fills the gap in
the research on risk identification and risk management of FDI in China. It provides a
reference for foreign SMEs to make investment or divestment decisions.
The Ministry of Commerce of the People’s Republic of China and the Forward In-
dustry Research Institute have proposed that China has seen the largest amount of FDI
withdrawal from South Korea, Japan, and the United States during the epidemic. A total
of USD 1.92 billion, USD 350 million, and USD 380 million of FDI were withdrawn from
South Korea, Japan, and the United States in 2020, respectively. FDI will recover in 2021,
but it will change. Moreover, multinational enterprises are withdrawing capital mainly
from Guangdong, Shanghai, and Jiangsu. During 2020–2021, Guangdong Province de-
registered 1274 foreign-funded enterprises with a disinvestment of USD 4.22 billion dol-
lars; 2649 foreign-funded enterprises were written off in Shanghai Province, with a dis-
investment of USD 4.32 billion, and 1027 of those enterprises were written off in Jiangsu
Province, with disinvestment of USD 5.33 billion. This study examines Korean, Japanese,
and American multinational corporations to reflect the disinvestment of foreign-funded
enterprises primarily from the aforementioned Chinese cities. Therefore, we need to pay
attention to enterprise risk management (ERM) or risk management (RM) of for-
eign-funded enterprises to make multinational enterprises more adaptable to the local
Chinese environment. FDI should be managed differently depending on its goal or type,
whether it seeks to gain resources, market shares, or efficiency. Does FDI risk appraisal
differ based on the nature or goal of the investment? From a theoretical perspective, it is
pretty apparent that the answer to question one is: ‘yes’. We attempt to answer the sec-
ond question by examining FDIs in China.
It is important to manage the risks associated with FDI in a reasonable manner,
given the multitude of FDI objectives [5,6]. Managing risk should, for instance, focus on
protecting the organization’s most important long-term goals. Business structures and
industry affiliations can endogenously determine the type and style of FDI risk. Gaffney
[7] and Kinuthia and Murshed [8] list labour management as one of the most significant
concerns in RM of capital-intensive businesses entering low-cost labour markets. An-
other option would be to seek a low-labour-cost country and manage the risk associated
with ORs. To reduce ambiguities arising from the differences between countries, it is
prudent to check the rationality or effectiveness of FDI RM in an identical country.
China's ongoing economic growth has made it a high-income market rather than a
low-cost one, making it a suitable location for FDI. China is only a distribution region for
some foreign companies, whereas others view the country as a leading business hub [9].
Several affirmative policies for foreign companies were cancelled following 2003, as
Chinese authorities switched to a policy that emphasized qualitative growth rather than
quantitative development. In China, the introduction of the revised Labor Act resulted in
a rise in wage rates [10]. As a result, foreign companies experienced economic difficulties
as the investment climate in China changed, resulting in divestitures of Chinese markets,
moving production facilities to Southeast Asia, or simply thinking about the Chinese
market as another outlet for foreign goods sold.
The OLI (ownership, location, internalization) theory proposes that location ad-
vantage determines the flow of international investment. However, different FDI moti-
vations have different considerations for location advantages and the evaluation of the
investment environment. Therefore, FDI motivations can be divided into market, effi-
ciency, resources, and strategic asset-seeking [11]. A systematic risk management system
Sustainability 2022, 14, 14874 3 of 20

for international enterprises was developed by COSO [12], which presents a concept of
detailed circular processes for risk management, such as risk awareness, risk element
analysis, risk control (avoidance, management, transfer, mitigation), and risk manage-
ment performance evaluation. According to Agarwal, risk response and management can
be divided into four main components, including strategic risk (SR) (such as economic
environment, policy environment, population change, competition); financial risk (FR)
(such as market risk, credit risk, price risk, liquidity risk); operational risk (OR) (such as
human error, computer operation error, decision-making error, management process
error); and hazard risk (HR) (such as property, regulations, individuals, breach of con-
tract, etc.). Insurance can solve hazard risk, whereas strategic measures are needed to
control the other three risks [13].
This study follows this framework and classifies risks into quadrants: FR, SR, HR,
and OR. OR reflects a mismatch of internal operating procedures with standard re-
quirements. However, despite having a wider range of risks than marketing risk, SR is a
lot like marketing risk. HR arises when a wide range of variables, such as inflation, ex-
change rates, asset values, liabilities, revenues, or expenses, are subject to changes. FR
includes changes in lending, forex, and equity prices [13,14]. A major goal of this study is
to determine whether FDIs manage their risks differently in China and whether their RM
is efficient. However, since this study only examines foreign enterprises in China, we
classify corporate risks into only four categories. Doing this allows RM activities to be
incorporated into operation activities without losing generality. According to Gaffney [7]
and Razzaq et al. [15], efficiency and market-seeking FDIs focus clearly on different risks
and are more effective at minimizing them.
In the current literature, integrated risk management is rarely discussed [16]. This
study elaborates and analyses the risk quadrant perception [9] and COSO risk corre-
sponding processes in terms of related risk management concepts [12]. Moreover, this
paper uses a questionnaire survey and professional consultation to gather “risk percep-
tion” material and analyze the data in order to overcome the bottleneck caused by finan-
cial statements and panel data. Hence, this paper represents a novel attempt at these as-
pects. This study examined the risk factors of smaller foreign manufacturing enterprises
in China. The survey was designed to determine how they manage risks and to evaluate
how it affects performance. Considering their investment objectives, we divided foreign
SMEs into two types, i.e., market- and efficiency-seeking. Five main sections make up this
study: Section 1 introduces the study and provides a summary of its context and objec-
tives; Section 2 summarizes and describes risks associated with management, direct in-
vestment, and performance and determines factors associated with risk. It also deter-
mines factors that should be included in an RM plan; Section 3 presents theoretical con-
cepts and hypotheses for the study are formulated; and Section 4 details empirical research
on RM for direct investments. A conclusion is provided in the last section, Section 5.

2. Conceptual Model
The conceptual background of this research is discussed in this section. It is very
important to mention that this study is based on the theory of integrated risk manage-
ment as described by COSO [12] and Agarwal [9] theoretical frameworks. These concepts
represent an assessment system for international enterprises’ internal and external risks
that were established so that risk management becomes a core strategy for enterprises.
The purpose of this study was to explore enterprise risk perception, conduct empirical
analysis, and generate empirical results from the correlation between "risk perception"
and the impact of enterprise performance. Moreover, it aimed to identify the risk re-
sponse strategy plan and develop the research framework and innovation model for the
risk factor, risk response, and performance evaluation.
Sustainability 2022, 14, 14874 4 of 20

2.1. FDI
The role of FDI in economic development is widely acknowledged by researchers,
especially in emerging markets. There is a complex interplay between FDI and economic
growth [17]. The concept that FDI boosts competitiveness has some empirical support.
There has been positive evidence, and some other research indicates that local enterprises
are being spilled over into foreign markets by foreign customers [18,19]. It is also perti-
nent to note, however, that FDI may have a negative effect on economic development as
it may crowd out local enterprises. According to some researchers, there are few positive
effects, whereas others believe there are mostly negative ones [20]. FDI can be described
by several theoretical explanations, including the control authority aimed at the man-
agement and profitability of foreign enterprises [21].
The ownership, location, internalization (OLI) theory, proposed by Dunning [22,23],
is considered by many to be the most widely accepted theory of organization. Taking this
widely accepted concept into account, Casson and Wadeson [24] and Luo and Zhang [25]
extend it further by incorporating the concept of company-specific and national-specific
advantages. As part of the concept of link, leverage, learn (LLL), Mathews [26,27] incor-
porates latecomers into the concept. As a result, several researchers have added uncer-
tainty concepts to the macroeconomic environment [8,28,29]. Based on Almfraji and
Almsafir [6] and Dunning [30], we differentiate market-oriented investment motives
from efficiency-oriented investment motives (including resources-oriented investments).
This study does not specify any regional differences in FDI in China [31,32], although
there is regional research on FDI in China [32].

2.2. Management of Risks

Strategic decisions and overall strategy significantly influence risk within a firm [33].
It is challenging for ERM to deal with uncertainty linked to strategic choices at a high
level. It has been shown that firm-level risk-taking is significantly influenced by mac-
ro-organizational factors, both in terms of amount and profitability [34]. It is possible in
ERM research to use both objective and subjective measures of risk. To explain manage-
rial behaviour, we need to understand workers’ perceptions of risk. Objective measures
of risk can be used to assess risk-related behaviours. What managers believe determines
their decisions. Strategic planning is often viewed as one of the key processes in ERM
literature [35]. It is known that the field is concerned with the endogeneity of firm stra-
tegic choices, so it will be necessary to study the factors that cause a firm to adopt ERM
and all the factors that influence how a firm implements ERM in order to understand the
impact of risk management on performance [36].
One of the most popular methods of identifying and classifying corporate risks ap-
pears to be the risk quadrant, which encompasses financial, hazard, strategic, and OR.
Zhu and Sardana [14] suggested that enterprises, stakeholders, and political forces
should work together to develop FR mitigation strategies. Agarwal [13] and McMaster et
al. [37] define SR as the uncontrollable and non-FRs facing corporations due to govern-
ment and economic factors, competitors and customers, and new technology factors. FR
is often called uncontrollable risk, resulting from fluctuations in an enterprise’s assets or
liabilities. Items under this category include market, credit, price, and liquidity risks [38–
40].
When OR is addressed, it refers to mismatches between expectations and reality
about systems or humans, which are accidental or incidental. Risks related to hazards are
usually insured as residual risks, and they are generally uncontrollable residual risks. In
this research, we do not differentiate OR from HR because OR cannot be separated from
management or management activity, which is considered enterprise operations [41].
Therefore, HR can be categorized as property, legal, personnel, and consequential losses
[13,32,42].
Sustainability 2022, 14, 14874 5 of 20

2.3. Management of FDI Risks

Globalization has made FDI riskier due to the increasing complexity of the interna-
tional environment [43]. Investment risk is a disadvantageous factor of FDI across all
firms because of institutional instability that causes losses to foreign firms. Researchers
have argued that FDI is mainly expressed as a political risk when it comes to managing
international investment [44]. It is possible to divide overseas investment risks into macro
risks and micro risks. In macroscopic risks, foreign-invested companies cannot control or
manage their investments when political ideologies or systems change in the host coun-
try. Alternatively, microscopic risk refers to a risk that affects a single industry or com-
pany within a specific field and can be controlled according to the business’s nature and
strategy in order to protect the company. As a result of the microscopic risks associated
with FDIs, companies with investments overseas need an integrated approach to man-
aging risk, and risk management methods, such as risk control and risk finance, must be
integrated into the risk management process [45]. Companies with overseas investments
reduce their risk exposure and reduce the size and uncertainty of losses by using risk
control techniques such as risk avoidance, diversification, combination, transfer, and loss
control. A risk finance technique (transferring and compensating losses) offsets losses
and maintains cash flow in the event of losses [46].
The risks associated with FDI are categorized as strategic, financial, and HRs, which
can be managed in strategic ways, such as through capacity building, strategic responses,
resource management, and human capital management. An FDI risk, for instance, is a
loss caused by wrongful conduct by the host country’s government that occurs in foreign
investment enterprises. These include interference or obstruction of commerce, changes
in stipulations, institutional instability, or seizure of foreign investor companies’ assets in
whole or in part [47,48]. Corporate performance and investments have been extensively
studied concerning RM [39,42,49,50]. Most existing literature focuses on domestic in-
vestment RM rather than international FDI RM. Thus, FDI risk in China has been inad-
equately studied.

3. Hypothesis and Analytical Model

This section presents the theoretical background and formulation of the hypothesis.

3.1. Hypothesis
Following is the detail of the research hypothesis.

3.1.1. Risk Factors and Risk Management: A Correlation

Step one is to correlate the risk control of Chinese foreign-owned companies with
the risk aspects involved. Here, RM is evaluated to determine whether it affects perfor-
mance directly or indirectly and whether performance satisfaction can be improved
through RM. Through RM, the second step is to identify if there is a difference in per-
formance risk factors based on investment motives. As part of the management of risks,
subsidiaries carry out localization [51,52], increase customer loyalty, strengthen the
brand names, develop strong relationships with local companies, and transfer technology
to subsidiaries when they face risks such as capital costs, regulatory issues, competitive
problems, and management concerns [15,53,54]. When facing market competition risk
and environmental uncertainty risk, Porter and Miller [55,56] suggested that foreign in-
vestment companies can reduce costs, differentiate, and centralize. According to Saeidi et
al. [57], enterprises manage risks better when they increase in size due to their increased
risk levels. As Cooke et al. [58] discovered, foreign-owned manufacturing companies in
China can manage their risks if the macro-environmental uncertainty increases using a
commitment-based human resource system. It has been observed by Shad et al. [49] that
business activity and social risk have a positive effect on RM.
Sustainability 2022, 14, 14874 6 of 20

Hypothesis 1. There is a significant impact of risk factors on performance.

3.1.2. Risk Factors and Risk Performance: A Correlation

The second step is to correlate risk factors with management performance. Business
performance was influenced more by external factors than by internal factors. A com-
pany's performance will be adversely affected more as a result of political risk, competi-
tive risk, technological lag, and scanty knowledge about the domestic industry. Many
studies show that a company’s financial standing negatively influences performance in a
foreign country [38,59–64]. Investment performance is negatively affected by increasing
institutional and legal concerns of enterprises doing business in China and uncertain
market conditions [37,42,65].

Hypothesis 2. There is a significant impact of RM on performance.

3.1.3. Risk Management and Risk Performance: A Correlation

The third step is to examine the correlation between RM and performance. A study
by Olson and Wu [66] indicates a positive impact on business performance can be
achieved by strengthening business strategy, leadership skills, and organizational man-
agement. An effective HR system and authority given to the local subsidiary can posi-
tively impact performance, according to Cooke et al.’s [58] study. Several ways have been
proven effective in promoting the performance of foreign-owned direct investment en-
terprises in China. It may include localizing production, and marketing capabilities,
promoting research and development abilities, diversification, improving technology
innovation abilities, developing local human resource development, establishing joint
ventures with local partners, strengthening domestic sales organizations, improving
strategy, scaling up finances, and following local laws [9,39,61,64,67–72].

Hypothesis 3. According to the type of investment motive (efficiency-seeking and mar-

ket-seeking), risk factors would have significantly different correlations with RM and performance.

3.1.4. Mediating Effects of Investment Motives

Several factors contribute to foreign enterprises’ investments in international mar-
kets. According to Almfraji and Almsafir [6] and Dunning [30], there are three signifi-
cant motives: seeking market opportunities, resources, and efficiency. FDI's motivation
(market-seeking or efficiency-seeking) affects the firm’s strategy or RM and performance
[15]. FDI motivations include market, efficiency, resources, and strategic assets-seeking
approaches [11]. Based on this study about China, market-seeking and efficiency-seeking
motivations are deemed to be more acceptable. Market-seeking motivation is to avoid
trade barriers and expand the market in the host country, whereas efficiency-seeking
motivation is to obtain abundant and low-cost labour in that country. Companies seeking
market share would not withdraw subcontractors or give up business from a large
company. However, efficiency-seeking companies would withdraw operations from
China or reverse their decision to return to foreign operations because tariffs on these
components can increase production costs [73,74]. It has also been found that those
businesses that pursued differentiation strategies (strengthening brands, quality, and
customer service) had the most significant impact. It turned out that performance and
productivity were more positively affected for those who adopted a cost advantage
strategy than those who employed a cost advantage strategy.

Hypothesis 4. According to the type of investment motive (efficiency-seeking and mar-

ket-seeking), risk factors would have significantly different correlations with RM and performance.
Sustainability 2022, 14, 14874 7 of 20

3.2. Analytical Model

Based on the risk mapping and management framework proposed by Agarwal [13],
this study divides risks into four types: strategic risk, financial risk, operational risk, and
accident risk by integrating and combining the existing research on transnational enter-
prise investment risk [7,10,22,26]. This will ensure the risk management research
framework is more in line with the realities faced by multinational enterprises investing
in China. It is worth mentioning that prior to this study, we conducted an informal pilot
study involving experts working with SMEs. Later, we planned the study and began the
literature review. Data was collected through face-to-face interviews, emails, and tele-
phone calls. It is necessary to mention that the interviews were aimed at gathering in-
formation to support this quantitative study. We tried to get as much information as
possible and discussed the sample size with statisticians. We also confirmed the sample
size by reviewing the online scholarly literature. For this study, we used the established
scale described by Kline [75]. Based on the risk factors of foreign enterprises investing in
China, this study divided them into financial, strategic, and HRs. In addition, perfor-
mance was incorporated as a dependent variable and RM was included as a parameter.
As part of the RM process, empirically verified risks from the earlier studies were used as
measures, which are now being implemented by businesses in their daily operations.
This study examines how RM affects an enterprise’s efficiency-seeking type and mar-
ket-seeking type, as well as a comparison of the mediating effect according to investment
motives. To examine the impact of parameters on independent and dependent variables,
research factors were designed, as presented in Figure 1.

Figure 1. Study paradigm.

The main focus of this study was to examine manufacturers of foreign enterprises
with subsidiaries in China (mostly smaller and medium-sized). The company’s for-
eign-based headquarters and Chinese branches were surveyed between February and
July 2022, and questionnaires were given to executives and managers. In order to per-
form statistical analysis, both the local visit and e-mail survey methods were simultane-
ously used, resulting in the collection of a total of 498 copies of the questionnaires.
In our study, we measured the following variables: industry competition, reduction
of tax rebates, brand and quality risk, technology gap with local firms, tech leakage, and
regulatory reinforcement. As an indicator of FR, we looked at the capital ratio as well as
Sustainability 2022, 14, 14874 8 of 20

the company’s credit rating, capital support, financing problems, and FRs of affiliates.
We also examined the rise in labour, raw materials, rental costs, and maintenance ex-
penses. There are many challenges associated with risk estimations, including difficulty
in forecasting future and potential damage, contract changes, consequential losses, and
uncertainty regarding investment laws and regulations. The performance measure in-
cludes adapting to Chinese markets and policies, increasing profitability and growth in
subsidiaries, achieving investment goals, and satisfying management.
This study used statistical routines, viz., Statistical Package for the Social Sciences
(SPSS) 18.0 and Analysis of Moment Structures (AMOS) 18.0 for the verification of de-
veloped hypotheses. The SPSS 18.0 program was used for frequency analysis of general
characteristics and exploration of factor analysis. AMOS 18.0 was used to perform a con-
firmatory factor analysis (CFA) and develop a structural equation model. CFA is used to
confirm whether data is suitable to fit the model or not. In order to perform this analysis,
we develop a hypothesis based on theoretical research. In this study, depending upon
risk type, we have proposed a corresponding hypothesis as aforementioned. The struc-
ture equation model used in this study can be represented by the following three matrix
equations:
η = Bη + Γξ + ς
The above equation represents the first matrix equation and is a representation of a
structural model. In this equation, η and ξ represent endogenous and exogenous varia-
bles, respectively. B and Γ stand for coefficients, and ς represents the error term. The
second and third matrix equations are as follows:
Y = Λyη + ε

X = Λxξ + δ
The above equations denote measurement models. Here, Y represents variables
which can be measured for endogenous variables. Λy is the coefficient of correlation
between measurable variables and their corresponding endogenous variables. X and Λx
indicate variables which can be measured for exogenous variables and the coefficient of
correlation between measurable variables and their corresponding exogenous variables,
in that order. Moreover, ε and δ denote errors that occur during the estimation process.
The purpose of this was to verify the suitability of the structural model, hypotheses,
and their mediating effects. Figure 2 illustrates the detailed process of AMOS, outlining
the relationship between risk factors, RM, and performance.

Figure 2. An illustration of the AMOS analytical process.

Sustainability 2022, 14, 14874 9 of 20

4. Results
4.1. Analysis of Data Frequencies
Table 1 presents an analysis of data frequencies. The survey involved 102 respond-
ents from large enterprises and 396 respondents from SMEs (20.5% and 79.5%, respec-
tively). There were 96 respondents (19.3%) from Jiangsu province, 305 (61.2%) from
Shanghai, and 97 (19.5%) from Guangdong province among the respondents. The in-
dustry type being operated by respondents was noted as follows: 392 respondents
(76.7%) worked in the manufacturing industry, whereas 106 respondents (21.3%) worked
in the service industry. Market-seekers comprise 316 respondents (63.5%), whereas effi-
ciency-seekers comprise 182 respondents (36.5%). A total of 335 respondents (67.3%)
were related to FDI, and 163 respondents (32.7%) were related to joint ventures. Ac-
cording to working experience, 17 respondents (3.40%) had been employed for one to
three years, 33 respondents (6.60%) had been employed for three to five years, and 448
respondents (90.0%) had been employed for over five years.

Table 1. An analysis of data frequencies.

Characteristics Frequency Percentage

Large enterprises 102 20.5
Enterprise size
Small and medium 396 79.5
Manufacturing industry 392 78.7
Industry type
Service industry 106 21.3
Market-seeking 316 63.5
Investment motives
Efficiency-seeking 182 36.5
Jiangsu province 96 19.3
Region Shanghai 305 61.2
Guangdong province 97 19.5
1–3 years 17 3.40
Working experience 3–5 years 33 6.60
Over 5 years 448 90.0
FDI 335 67.3
Investment type
Joint venture 163 32.7
South Korea 353 70.9
Divestment country Japan 71 14.2
The United States 74 14.9
Total 498 100.0

4.2. Confirmatory Factor Analysis

Taking into account the hypotheses developed in this study, we conducted a con-
firmatory factor analysis (Table 2). The number of model fitting indices were estimated,
including minimum discrepancy function by degrees of freedom divided (CMIN/DF) =
2.030, root mean square error of approximation (RMSEA) = 0.061, Tucker–Lewis index
(TLI) = 0.927, Chi-square (χ2) = 789.538, incremental fit index (IFI) = 0.936, root mean
square residual (RMR) = 0.033, comparative fit index (CFI) = 0.935, and normed fit index
(NFI) = 0.881. Parameter output values confirmed model fitting. CFA was done to vali-
date the structure of the factors indicating variables which were employed to evaluate
hypotheses. According to this study, we can conclude that the variables or factors used
are valid as well as representative. This is because all CRs values were above 0.70,
whereas all Average Variance Extracted (AVE) values were above 0.50.
Sustainability 2022, 14, 14874 10 of 20

Table 2. CFA output.

Risk Type Item Factor Loading Coefficient Standard Error t-Value CR AVE
Strategic Strategic_8 1.000 0.810
Strategic_7 1.012 0.847 0.061 16.603 ***
Strategic_5 0.855 0.774 0.058 14.611 *** 0.964 0.770
Strategic_4 0.901 0.816 0.057 15.742 ***
Strategic_3 0.686 0.753 0.049 14.086 ***
Strategic_2 0.731 0.773 0.050 14.588 ***
Strategic_1 0.754 0.769 0.052 14.485 ***
Operational Operational_6 1.000 0.826
Operational_5 1.055 0.920 0.052 20.357 *** 0.955 0.782
Operational_4 1.052 0.857 0.058 18.014 ***
Operational_3 1.154 0.876 0.062 18.709 ***
Operational_2 1.075 0.858 0.060 18.051 ***
Operational_1 1.075 0.861 0.058 18.529 ***
Financial Financial_8 1.000 0.788
Financial_7 0.973 0.748 0.050 19.336 ***
Financial_6 0.942 0.757 0.057 16.638 *** 0.968 0.792
Financial _5 1.072 0.902 0.062 17.339 ***
Financial_4 1.229 0.862 0.075 16.312 ***
Financial_3 1.054 0.863 0.064 16.340 ***
Financial_2 0.918 0.837 0.059 15.673 ***
Financial_1 0.886 0.789 0.061 14.502 ***
Hazard LegalandHazard_5 1.000 0.807
LegalandHazard_4 0.867 0.736 0.066 13.140 *** 0.937 0.749
LegalandHazard_3 0.868 0.772 0.062 13.993 ***
LegalandHazard_2 1.076 0.822 0.071 15.235 ***
LegalandHazard_1 1.046 0.835 0.065 16.060 ***
RM Management_1 1.000 0.643
Management_2 1.351 0.729 0.142 9.491 *** 0.885 0.662
Management_3 0.938 0.526 0.125 7.480 ***
Management_4 1.411 0.746 0.147 9.625 ***
Performance Performance_1 1.258 0.755 0.108 11.702 *** 0.949 0.790
Performance_2 1.459 0.833 0.114 12.809 ***
Performance_3 1.597 0.893 0.117 13.604 ***
Performance_4 1.401 0.875 0.105 13.382 ***
Performance_5 1.258 0.755 0.108 11.702 ***
Fit Statistics: CMIN/DF = 2.030, CMIN = 789.538, NFI = 0.881, IFI = 0.936, p = 0.000, RMR = 0.033, TLI =
0.927, CFI = 0.935, RMSEA = 0.061. *** p < 0.01.

4.3. Structural Equation Modeling

Estimated parameters remained as CMIN/DF = 2.096 (significance is ensured if ≤3),
RMR = 0.38 (goodness of fit if ≤0.05), RMSEA = 0.63 (goodness of fit if between 0.05 and
0.08), CFI = 0.922, and TLI = 0.914. Since these values satisfy the basic requirements of
0.922 (CFI, TLI, and IFI are goodness of fit if ≥0.9), it was proven that the theoretical
model established in this study fitted well with the overall research hypothesis. Accord-
ing to a study by Kline [75], the index for measuring the model fit of structural equations
can be determined as CMIM/df, RMR, RMSEA, and CFI. Since NFI is sensitive to the
complexity of the model, the more complex the model, the lower the fit. Therefore, it is
argued that it is desirable to evaluate the model fit with the above four indices because
CFI compensates for this shortcoming of NFI. In addition, CMIN/df, RMR, and RMSEA
are commonly used to evaluate the model's absolute fit index. Table 3 displays the results
for fitting the model. In the structural equation, the effect analysis is largely divided into
direct effect (DE), indirect effect (IE), and total effect (TE). In addition, based on the di-
Sustainability 2022, 14, 14874 11 of 20

vided effects, the presence and magnitude of DE and IE transmitted to the final de-
pendent variable in the relationship between each variable can be checked, so effect
analysis can be considered very useful for a more in-depth analysis.

Table 3. Estimation of the fit of the model [58].

CMIN/df GFI NFI p RMR AGFI RMSEA IFI TLI CMIN CFI
2.096 0.805 0.861 0.000 0.038 0.772 0.063 0.922 0.914 1194.858 0.922

Table 4 shows the results of decomposing and estimating DEs as well as IEs on the
TE of the research model. It also represents the statistical significance of DEs and IEs.
First, DEs of risk factors on RM, OR (p < 0.001, β = −0.293), FR (p < 0.05, β = −0.194), and
HR (p < 0.05, β = 0.198) were found to be statistically significant. β represents effect.

Table 4. Mediating effect outcome.

Independent Dependent Mediating

TE p-Value DE p-Value p-Value
Variable Variable Effect
SR RM −0.137 0.124 0.137 0.124 - -
OR RM −0.293 *** 0.000 −0.293 *** 0.000 - -
FR RM −0.194 * 0.018 −0.194 * 0.018 - -
HR RM 0.198 * 0.049 0.198 * 0.049 - -
SR Performance −0.289 *** 0.000 −0.203 ** 0.004 −0.086 0.145
OR Performance −0.202 ** 0.001 −0.019 0.738 −0.183 ** 0.003
FR Performance −0.232 ** 0.003 −0.110 0.083 −0.122 0.077
HR Performance 0.165 0.166 0.041 0.596 0.124 0.094
RM Performance 0.627 *** 0.000 0.627 *** 0.000 - -
* p < 0.05, ** p < 0.01, *** p < 0.001.

Furthermore, considering the DE of risk factors on performance, the IE and TE

through RM, SR of the DE (p < 0.01, β = −0.203) and TE (p < 0.001, β = −0.289) was found to
be important, and for OR, the IE (p < 0.01, β = −0.183) and TE (p < 0.01, β = −0.202) were
significant. TE (p < 0.01, β = −0.232) of the FR was found to be significant. Finally, by
examining the DE of RM on performance, RM (p < 0.001, β = 0.627) was found to be im-
portant.

4.4. Mediating Effect according to Investment Motives

Table 5 illustrates the results of analyzing the degree of influence of each efficien-
cy-seeking hypothesis according to investment motivation. First, in the correlation be-
tween RM and risk factors, SR → RM (p < 0.05, β = −0.380) and OR → RM (p < 0.05, β =
−0.325) were found to be significant. In addition, in the correlation between performance
and risk factors, SR → performance (p < 0.05, β = −0.342) was found to be important, and
in the relationship between RM and performance, RM → performance (p < 0.01, β = 0.458)
was found to be significant. A detailed analysis of the amount of influence of each hy-
pothesis concerning the domestic market-seeking type of investment motive on the de-
gree of impact of each hypothesis is presented in Table 6. The correlation between RM
and risk factors, SR → RM (β = 0.309, p < 0.05), OR → RM (p < 0.01, β = 0.266), FR → RM (p
< 0.001, β = −0.460), HR → RM (p < 0.05, β = 0.114) was found to be important. Moreover,
the correlation between performance and risk factors, OR → performance (p < 0.05, β =
−0.233), was found to be significant, and in the relationship between RM and perfor-
mance, RM → performance (p < 0.05, β = 0.567). 001) was found to be important. Ac-
ceptance or rejection of the hypothesis based on their significance is presented in Table 5.
Sustainability 2022, 14, 14874 12 of 20

Table 5. Estimates of path coefficient using investment motives.

Independent Dependent
Hypothesis Efficiency-Seeking Market-Seeking
Variable Variable
Coefficient C.R. Accepted or Not Coefficient C.R. Accepted or Not
H1-1 SR RM −0.380 −2.533 * O 0.309 2.570 * O
H1-2 OR RM −0.325 −2.552 * O 0.266 2.720 ** O
H1-3 FR RM 0.057 0.470 X −0.460 −3.417 *** O
H1-4 HR RM 0.001 0.009 X 0.316 2.353 * O
H2-1 SR Performance −0.342 −2.489 * O −0.182 −1.699 X
H2-2 OR Performance 0.178 1.605 X −0.223 −2.555 * O
H2-3 FR Performance −0.142 −1.345 X −0.052 −0.463 X
H2-4 HR Performance −0.020 −0.145 X −0.043 −0.356 X
H3 RM Performance 0.458 2.987 ** O 0.567 3.336 *** O
* p < 0.05, ** p < 0.01, *** p < 0.001.

Table 6 depicts the results of estimating the DEs and IEs on the TE of the efficien-
cy-seeking type by investment motive and then applying the statistical significance of
DEs and IEs. As a result of the analysis, looking at DE of risk factors on RM, SR (β =
−0.380, p < 0.05) and OR (β = −0.325, p < 0.05) were found to be significant. In addition,
looking at DE of risk factors on performance, IE and TE through RM, SR is DE (β = −0.342,
p < 0.05) and TE (β = −0.515, p < 0.001) was found to be significant. Lastly, looking at the
DE of RM on performance, RM (β = 0.458, p < 0.001) was found to be significant.

Table 6. Estimates of DE, IE, and TEs of efficiency seeking type.

Independent Dependent
Efficiency-Seeking Type
Variable Variable
TE p DE P IE p
SR RM −0.380 * 0.011 −0.380 * 0.011 - -
OR RM −0.325 * 0.011 −0.325 * 0.011 - -
FR RM 0.057 0.638 0.057 0.638 - -
HR RM 0.001 0.993 0.001 0.993 - -
SR Performance −0.515 *** 0.000 −0.342 * 0.013 −0.174 0.088
OR Performance 0.029 0.845 0.178 0.108 −0.149 0.191
FR Performance −0.116 0.466 −0.142 0.179 0.026 0.810
HR Performance −0.019 0.938 −0.020 0.885 0.001 0.993
RM Performance 0.458 ** 0.003 0.458 ** 0.003 - -
* p < 0.05, ** p < 0.01, *** p < 0.001.

Table 7 displays the results of estimating DEs and IEs on TE of the domestic mar-
ket-seeking type by investment motive and then applying the statistical significance of
DEs and IEs. As a result of the analysis, first, looking at DEs of risk factors on RM, SR (β =
0.309, p < 0.05), OR (β = 0.266, p < 0.01), FR (β = −0.460, p < 0.001) and HR (β = 0.316, p <
0.05) were found to be significant. Furthermore, looking at DEs of risk factors on per-
formance, IEs and TE through RM, IE (β = 0.175, p < 0.05) was found to be significant for
SR, DE (β = −0.223, p < 0.05) and IE (β = 0.151, p < 0.05) were significant, and FR was IE (β =
−0.261, p < 0.01) and TE (β = −0.313), p < 0.01) was found to be significant. Finally, looking
at the DE of RM on performance, RM (β = 0.567, p < 0.001) was found to be significant
(Figures 3 and 4).
Sustainability 2022, 14, 14874 13 of 20

Table 7. Estimates of DE, IE, and TEs of market seeking type.

Independent Dependent
Market-Seeking Type
Variable Variable
TE p DE P IE p
SR RM 0.309 * 0.010 0.309 * 0.010 - -
OR RM 0.266 ** 0.007 0.266 ** 0.007 - -
FR RM −0.460 *** 0.000 −0.460 *** 0.000 - -
HR RM 0.316 * 0.019 0.316 * 0.019 - -
SR Performance −0.006 0.958 −0.182 0.089 0.175 * 0.020
OR Performance −0.072 0.402 −0.223 * 0.011 0.151 * 0.020
FR Performance −0.313 ** 0.005 −0.052 0.644 −0.261 ** 0.007
HR Performance 0.136 0.277 −0.043 0.722 0.179 0.057
RM Performance 0.567 *** 0.000 0.567 *** 0.000 - -
* p < 0.05, ** p < 0.01, *** p < 0.001.

Figure 3. Path coefficient (Efficiency-seeking).

Figure 4. Path coefficient (Market-seeking).

Sustainability 2022, 14, 14874 14 of 20

5. Discussion
This section presents a comprehensive discussion of market-seeking and efficien-
cy-seeking models. Limitations of this study are also given at the end. It is also very im-
portant to mention that all the literature cited in this section confirms our findings. De-
tails are presented along with each type of risk.

5.1. Efficiency-Seeking
When a multinational corporation encounters financial and HRs in its operations in
China, it usually does not respond to risks, such as improving the financial structure, in-
creasing financing, or purchasing insurance [52]. Although the enterprise will actively
respond to strategic and ORs, due to the increase in labour costs, the small size of the
enterprise and other reasons, even through RM, the enterprise performance improve-
ment is not obvious [39]. At this time, production efficiency-oriented companies will
gradually move to other countries or regions with lower labour costs. Risk response and
performance were negatively affected by higher SR, but RM did not mediate this impact.
The lack of business competitiveness, a lack of market knowledge, a lack of technology, a
lack of foreign networks resulted in “Cost Leadership” for foreign-owned small manu-
facturing firms. They are unable to present an appropriate RM strategy responding to
changes in government policy and tax benefits [68,76].
An operations’ RM is observed to have a negative effect on RM, no notable mediat-
ing effect on performance, and no meaningful DE on performance. Consequently, if OR
increases, RM cannot be conducted efficiently, and the mediating effect is not significant.
Production efficiency-oriented companies that export products manufactured by sub-
sidiaries in China to their home countries or third-country markets are said to be more
important than securing local market knowledge in the case of coordinating and inte-
grating decision-making between parent companies and subsidiaries. As a result, it im-
plies the need for high levels of management and control at the headquarters of produc-
tion efficiency-oriented companies. To increase organizational commitment of Chinese
employees, contrary to this theoretical correlation, it is necessary to give them responsi-
bilities that will enable them to have clear and well-planned goals, along with more au-
thority.
Because foreign companies entering China have high levels of head office manage-
ment and control, they are incapable of motivating and assigning responsibilities to local
employees, resulting in a decline in the efficiency of local production. Furthermore, since
the head office is primarily responsible for research and development and raw material
procurement, it cannot present an appropriate operational RM plan that would reflect
changes in local consumer behavior. Risk response, RM, and performance were not sig-
nificantly affected by FR in financial RM. As a result of factors such as rapid increases in
labor costs and land prices, if the domestic market is unable to secure competitiveness,
efficiency-seeking manufacturing businesses may have difficulty surviving. It is, there-
fore, more likely that Chinese subsidiaries will withdraw from the market or factories
will move to neighboring Southeast Asian countries [8,58,73].
Risk response, RM, and performance were not significantly affected by HRs in haz-
ard RM. As Dudas and Rajnoha [73] found, the possibility of withdrawal has a positive
impact on rather than the management of risk, as indicated by this study. The market
condition in the host country disappears if tax laws and regulations frequently change,
subsidiaries have an advantage in local management, and the environment degrades
[7,74]. It is proven that RM directly impacts performance by a statistically significant
positive level; however, because of “high administration costs”, all efficiency-seeking
models do not have a positive mediating effect, and RM has no meaning [61].
Sustainability 2022, 14, 14874 15 of 20

5.2. Market-Seeking
When an enterprise encounters FRs, the risk response performance is negative. At
this time, the enterprise will choose transformation or divestment, or joint venture
strategy with other enterprises [75,76]. However, when an enterprise encounters strate-
gic, operational, and hazardous risks, it will actively respond and reduce the simple
risks in business operation by means of strategic market transformation, digital trans-
formation, human resources re-integration, promoting digital systems, and purchasing
various insurances [77]. High SR significantly affects risk response as well as RM's ability
to enhance performance. By developing localization processes and localized brands, ex-
panding regional R&D, and forming collaborations and partnerships locally, foreign
companies in China can enhance their efficiency. They can also innovate processes, im-
prove productivity, and enhance productivity [7,42,54,60,78,79].
In operational RM, it was found that the higher OR, the greater the positive effect on
RM and the greater the positive impact on performance through RM, which had a medi-
ating effect and a negative impact on performance. Therefore, when OR increases, RM is
actively implemented, and performance can be improved by using it as a medium. In
addition, failure to manage OR factors directly reduces performance. This is consistent
with adopting a strategy to secure the decision-making authority of subsidiaries and
have a positive effect on performance. A higher FR impacted risk response more nega-
tively and mediated performance through RM more negatively. A rising liability ratio
results in a falling credit rating, a lower capital adequacy ratio, and subsidiaries' local
financing in China becomes impossible, resulting in an FR. Accordingly, when the fi-
nancial situation of the head office declines, the subsidiaries' financial RM cannot be ef-
fectively carried out [64,80]. It is more likely that subsidiaries will develop products with
high value-added industries if they experience an increase in overall costs of corporate
management, including materials, rentals, and operating income [73].
Higher HR had an effect (positive) on risk response, and it also had a mediating ef-
fect on performance. By examining local regulations and legal content thoroughly, pro-
tecting property rights, and enhancing employee skills and motivation, foreign compa-
nies can increase performance. Expatriate executives can live with local subsidiary em-
ployees and receive insurance coverage before advancement [15,61,70]. There has been
some evidence that foreign-owned subsidiaries seeking the market in China might be
able to bolster their performance by strengthening strategies, sales abilities, research and
development capabilities, technology innovation capacity, manufacturing flexibility, and
workforce development [39,52,75,81].

5.3. General Discussion

Recently, the development of the digital economy has created many new business
forms and new business models, providing new opportunities for multinational enter-
prises to develop in China. Currently, China has formed the biggest and most active
digital service market, and the global proportion of e-commerce sales increased from 8%
in 2012 to 57% in 2021 [82]. For multinationals in China, in the wave of digitalization, they
should combine their global advantages with the characteristics of the Chinese market to
speed up their digital transformation so as to better cope with external uncertainties.
During the epidemic, transnational enterprises with a higher degree of digitalization are
less affected by COVID-19 [83]. Digital transformation emphasizes value more than cost,
which belongs to strategic thinking. However, it is difficult for enterprise leaders to
change from operational thinking when they need to defend against losses and increase
profits in the short term. This is a major challenge for executives who are committed to
reforming the organization from within.
Increasing foreign investment has played a crucial role in China's economic growth
as it promotes dual circulation models to deal with complex internal and external chal-
lenges [76]. Since FDI is expanding rapidly in the Yangtze River Delta economic belt, it is
Sustainability 2022, 14, 14874 16 of 20

crucial in this development strategy [2]. This research focuses on the RM performance of
FDIs in the Yangtze River Delta economic belt. There is both market-seeking FDIs and
efficiency-seeking FDIs in this area. According to the statistical results of this empirical
research, appropriate corresponding measures could not eliminate all risks associated
with efficiency-seeking enterprises. As a consequence, they cannot implement a cost
leadership strategy in China due to factors such as increasing management expenses,
lessening support for tax, and strengthening regulations. In the absence of RM (ex., As-
sembly of a mechanical part and exporting it to a third country, etc.), they choose con-
version to a large company's contractors or withdrawal (U-turn back to Foreign or relo-
cation to a third country).
Strategic and HRs of domestic market-seeking enterprises can be mitigated through
appropriate corresponding measures as they improve. However, FRs cannot be con-
trolled by appropriate measures if the head office's financial state deteriorates and total
management costs increase. Companies that are more domestically oriented tend to offer
their employees better education and training, provide more diverse welfare benefits,
and have higher wages, performance-based compensation, fair personnel evaluation, and
career development systems that encourage long-term service compared to competitors.
Increasing competitive advantage through the implementation of a human resources
system will have a positive effect on performance. Globally, market-seeking type com-
panies adapt to policy change (reduce pollution, etc.) through joint ventures with local
companies (ex, Eland and Parkson, Hyundai, Beijing automobile, etc.), establishing sub-
sidiaries in smaller cities following brand recognition as well as reliability (ex, electronics
industry, fashion, etc.), developing diverse financial and business models through di-
versification (ex, invest in real estate, a fusion of manufacturing and finance, the launch
of local brands, etc.), and employing local human resource and organization manage-
ment. The headquarters of a company that seeks efficiency can easily control its corporate
strategy and withdrawal possibilities, whereas a company seeking market share needs to
implement localizing strategies and structures that manage risks intensively.

5.4. Limitations
Similar to most research, our study is subject to potential limitations. As we only
focus on foreign–Chinese joint ventures as a sample for empirical analysis and do not
measure and compare the results of enterprises from other countries, the generalizability
of the study results is limited. Due to limited data, empirical results may lack credibility.
Therefore, upcoming studies should pay more attention to data collection and enrich re-
search results through accurate comparative analysis. Future research also needs to ex-
amine the ways in which firms or industries measure levels of risk. In addition, future
research should also examine how to monitor the effect of the COSO process on RM.
Additionally, it is vital to analyze the RM impact of foreign industries entering the ser-
vice sector, including financial institutions and subsidiaries, to satisfy local consumer
preferences. It will be important to understand the risks of foreign–Chinese joint ventures
and develop appropriate RM strategies.

6. Conclusions
The Chinese government has proposed a dual circulation economic development
strategy to deal with the complexity of global issues under the influence of COVID-19. As
a result, China is increasingly dependent on FDI. It is, therefore, crucial to managing the
risks associated with FDI. In spite of the diversity of corporate risks, there is a growing
consensus that risks can be classified into four quadrants: FR, SR, HR, and OR. Due to
risk management failures or unexpected risks, strategic management has attributed
withdrawal to production costs or marketing, but risk management has never addressed
it. Moreover, SMEs are more vulnerable to risks than large ones. Currently, the published
literature fails to explain how SMEs can manage FDI effectively by taking risks into con-
sideration. This study fills this gap for the first time by combining Dunning’s investment
Sustainability 2022, 14, 14874 17 of 20

motives theory with COSO risk management process theory to examine SMEs' risk per-
ception in China. The study also tests four hypotheses related to FDI characteristics,
performance, and risk management based on the relevant literature. The data for the sta-
tistical analysis came from a questionnaire survey of 498 FDIs.
SPSS 18.0 program was used for frequency analysis of general characteristics and
exploration of factor analysis, whereas AMOS 18.0 was used to perform a confirmatory
factor analysis and develop a structural equation model. The findings indicate that for
efficiency-seeking SMEs, strategic risk and operational risk have a significant impact on
risk management, whereas, for market-seeking SMEs, all risks, i.e., strategic risk, opera-
tional risk, financial risk, and hazard risk, have a significant impact on risk management.
On the other hand, for efficiency-seeking SMEs, strategic risk has a significant impact on
performance, whereas for market-seeking SMEs, operational risk has a significant impact
on risk performance. Moreover, efficiency-oriented enterprises can modify their strate-
gies by implementing digital transformation and localization strategies, whereas pro-
duction efficiency-oriented enterprises will divest because of risks without finding a
better strategy. Thus, this study contributes to understanding the risks associated with
FDI and can serve to develop management strategies.
The results of this study have some implications for the investment risk manage-
ment of foreign SMEs in China. First, according to the investment motivation of the en-
terprise, SMEs need to select the location for investment. For example, enterprises that
need high-quality talents, advanced equipment, and technology can choose to invest in
coastal provinces in eastern China (such as Zhejiang Province, where the digital economy
is most popular), and those that need low land rents and labour can choose to invest in
cities in central and western China. In addition, China is currently at the forefront of the
digital revolution. In order to meet the needs of local market competition, foreign SMEs
should speed up digital transformation. They must change the traditional business
model, weaken the boundaries of enterprises, and make consumer demand more con-
sistent with commodity supply. Furthermore, due to cash flow risks and reduced reve-
nue, large companies did not withdraw their investment during COVID-19 but rather
made digital transformations or were kept waiting. Despite this, when SMEs in many
countries faced COVID-19 risks in China, divestment was conducted, so this study can
accurately reflect ongoing FDI conditions. Therefore, this study can help FDIs to develop
reliable risk-management strategies.

Author Contributions: Conceptualization, H.Y. and M.M.; methodology, L.Z. and C.Q.; validation,
C.Q. and Y.C.; formal analysis, H.Y.; investigation, L.Z.; resources, C.Q.; data curation, Y.C.; writ-
ing—original draft preparation, M.M. and H.Y.; writing—review and editing, L.Z. and C.Q.; visu-
alization, Y.C.; funding acquisition, H.Y. and C.Q. All authors have read and agreed to the pub-
lished version of the manuscript.
Funding: This research received no external funding.
Institutional Review Board Statement: Ethical review and approval were waived for this study
because the survey with human subjects consisted of non-invasive items.
Informed Consent Statement: Informed consent was obtained from all the subjects involved in the
study.
Data Availability Statement: The data presented in this research are not publicly available due to
participants’ privacy.
Conflicts of Interest: The authors declare no conflict of interest.

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