Navigating Investment in Risky Market: Comparative Analysis of Chinese State-Owned Enterprises and Private Firms Operating in Indonesia

Abstract

China's overseas investments are often characterised as top-down initiatives driven by strong political motives to exert influence over host countries. This view – commonly referred to as Chinese exceptionalism – tends to overlook the tactical, ground-level strategies that Chinese actors adopt to navigate local contexts. Using Indonesia as a case study, this article argues that the success of Chinese investments is best explained through a combination of commercial rationale, strategic collaboration and adaptive political tactics. This study examines the political strategies employed by Chinese state-owned enterprises (SOEs) and private firms to manage the complexities of investing in Indonesia – a country marked by rapid economic growth as well as persistent challenges such as resource nationalism, corruption and regulatory uncertainty. Despite these obstacles, Chinese entities have achieved considerable success through distinct approaches. SOEs generally rely on political support from both the Chinese and Indonesian governments to secure financial backing and guarantees, especially for large-scale infrastructure projects like the Jakarta–Bandung high-speed rail. In contrast, private firms frequently partner with Indonesian conglomerates to overcome regulatory and permitting barriers, with local partners playing a critical role in securing political access.