Performance analysis of the Spanish business industries with investment presence in China

This article seeks to compare the average profitability by sector for Spanish companies that have invested in China during the period 2008-2013, with the average profitability for Spanish firms from the same sector. Furthermore, it tries to determine which industries are giving the highest returns in the Chinese market. The investment flow of the Spanish companies towards China has increased in the first decade of the present century, but with the financial crisis this flow has decreased, causing possible effects on the firms' performance. With a sample of 228 firms we carried out a comparison between the firms with higher investment rates and lower invesment rates in China. After that, we categorized the companies into 17 different industries and we compared the Return of Investment (ROI) of these firms to achieve our objectives. The results show an unclear tendence of the ROI for all the companies during the analyzed period, but the companies with higher investment rates in China obtained a higher profitability of their assets during the analyzed period compared with the companies with a lower investment rate. Moreover, for the companies with higher investment rates, the most profitable sectors comparatively are the food industry, textile industry and metallurgy, while for the other companies with lower investment rates the most profitable sector is the pharma industry. The results are important for companies considering the internationalization strategy in order to improve their performance. For future research, the characteristics of the firms that explain higher performance should be analyzed in order to improve managerial contributions.