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AbstractThe Chinese government says that it supports the notion of international diversity of political‐economic systems. This should not be regarded as mere propaganda. Apart from a brief period during the Cultural Revolution, China never was interested in exporting its ideology or in trying to turn other countries into a replication of itself. It is unlikely that China will change its attitude in this regard, even as it emerges as a new superpower. On the contrary: as it becomes more influential at the multilateral level, it is likely that China will promote political‐economic diversity as a major norm in international relations. This would limit the ability of the west to promote liberal democracy and economic liberalism through multilateral institutions, and perhaps even bilaterally. One of the effects of this process would be that the competitive advantage of Chinese companies in developing countries increases vis‐à‐vis western firms. This would accelerate the power shift in the developing world towards China from the west.Policy Implications


In the years ahead China is likely to push international diversity as a major norm in international relations.

China's drive towards international diversity challenges the western support for economic and political liberal values in international relations.

The more China succeeds in making the institutions of global governance ideologically 'neutral' (i.e., not representing liberal values and thereby favouring the Chinese position vis‐à‐vis the west), the more difficult it becomes for the US and its western partners to use these institutions to export liberal democracy and economic liberalism to the developing world.

It will be increasingly difficult for western firms to compete with their Chinese counterparts in developing countries. This strengthens Chinese economic ‐ and therefore political ‐ influence in the developing world vis‐à‐vis western influence.

Today Philips is one of the largest foreign investors in East Asia. The foundation for the company's East Asian position was laid by investment in Taiwan in the 1960s and early 1970s, at a time when this country and the rest of the region were still largely ignored by other European investors. This article investigates the motives for Philips to play a pioneering role among European firms in large-scale investing in Taiwan. The author uses the traditional method for direct investment analysis, known as Dunning's eclectic paradigm. He also addresses shortcomings in this method regarding individual company behavior, by adding a corporate governance analysis that is based on Freeman's stakeholder theory. The resulting analysis shows that, although locational factors constituted the main precondition to direct investment by Philips, the crucial reason Philips made its early investments in Taiwan was its chief executive officer's enthusiasm for this particular project.