FDI location at the subnational level: a study of EJV's in China

Abstract

The location of FDI activities by MNEs is of interest to international business researchers, especially in light of the rapidly changing economic landscapes in many regions of the world. This paper adds to the literature on MNEs’ location choices, focusing on how business characteristics are related to location, in a sample of 6430 foreign equity joint ventures (EJVs) in China during 1984–1996. The results show that the duration of the EJV agreement, the origin of the foreign investor, and the type of business activity are related to the location of the EJVs’ business activities within China. Significant differences are noted in the locations of ventures in the manufacturing and service sectors, and there is evidence of an increasing preference for MNEs to locate their activities in China’s large, metropolitan cities. These findings reflect the dynamic nature of government policies toward FDI in China and their impact on the location choices of MNEs.