Agglomeration and Competition among Chinese Cities: An Investigation of Taiwanese High-Tech Foreign Direct Investment

Abstract

The purpose of this study was to investigate how Taiwanese high-tech firms' foreign direct investment (FDI) leads to agglomeration and competition among cities in China. By using social network analysis to analyze 1,111 subsidiaries affiliated with 270 multinational corporations (MNCs) during the years between 1988 and 2006 in 30 major Chinese cities, this study finds that: 1) agglomeration in Chinese cities falls into three primary categories: the hub cluster, the communication-extended cluster, and the computer-extended cluster. Among the aforementioned clusters, the hub cluster is the most critical in terms of firm location, and therefore is often a high-priority investment site for Taiwanese high-tech firms. 2) Chinese cities fall into four primary groups, or blocks: the core block, the coast block, the inland block, and the periphery block; these groups were determined by applying a structural equivalence analysis of which members of each type are in competition with one another. By linking the findings of the urban network characteristics to Chinese regional economic policies, this study provides guidance to aid executives in determining the optimal location for future FDI. Implications and suggestions for host country governments in terms of firms' investment strategies are also discussed

Unpacking intercity competitive relations in the global corporate spatial organization of manufacturing

“…Following this rationale, 'structural equivalence' has been increasingly used in different disciplines to empirically examine 'competitive relations' (Maoz et al, 2006;Zhang et al, 2014). For instance, based on the structural equivalence analysis of the investment of Taiwan High-Tech enterprises in the mainland of China, Cheng et al (2011) identified the competition relations among cities, in which multinational firm could bargain with competing cities to achieve more concessional investment conditions. In this study, we aim to show how this method can be extended to examine intercity competitive relations in the global urban network.…”

A quasi‐natural experiment research regarding the impact of regional integration expansion in the Yangtze River Delta on foreign direct investment

“…As one of the key elements of globalization, the interaction between foreign direct investment (FDI) and local economic development constitutes the essence of the investment development path paradigm (Cheng et al, 2011;Dunning, 1982). Since the reform and opening-up, China has made great achievements in attracting and utilizing FDI through the advantages in resources such as land, labor, and energy, as well as favorable policy conditions (Sang & Zhao, 2019).…”

Can High-Tech Ventures Benefit from Government Guanxi and Business Guanxi? The Moderating Effects of Environmental Turbulence

“…Government-driven high-tech clusters were chosen as the investigation setting for two reasons: First, new ventures belonging to these clusters were assumed to accurately describe their connections (guanxi) to the government and its officials, which often support or guide them to stimulate local economic growth and technological progress [42]. Second, new ventures in these clusters actively engaged in market competition and industrial divisions and thus could accurately describe their connections (guanxi) to the business sector [43].…”