Factors affect investment amount and location choice: evidence from Taiwanese enterprises’ investment in mainland China
Authors: Hsin-Hong Kang, Wan-Zi Liao
Journal: Chiao Da Management Review. Jun. 2006, 26(1): 15-38.
Keywords: Investment in China; Location choice; Critical factors; Multidimensional regression analysis
Abstract:
The major purpose of this study is to investigate the determinants of location choice of Taiwanese enterprises’ investment in Mainland China
with an emphasis on the macroeconomics advantages of individual provinces among China and the different characteristics of every investment
enterprise. The study period is from 1991 to 2002. More specifically, this study utilizes the regression method to establish two empirical
models: the macroeconomics factor model and the individual characteristics of firms’ model. Major findings of this study include 1. In the
macroeconomics factor model, we find that the production cost is an important factor to influence Taiwanese enterprises’ location choice.
Furthermore, Taiwanese enterprises tend to invest in the regional clusters where the total amount of foreign direct investment, the degree of
industrialization and the infrastructure are high. 2. In the firms’ individual characteristics model, we find that at present, most Taiwanese
enterprises still invest in coastal provinces. But with the increase of investment experiences in China, the firms are more willing to invest
in the non-coastal, small market sized provinces. Finally, different industries will have different location preferences.