Survival of outward FDI in China’s food industry

Abstract

Purpose -The purpose of this paper is to investigate the stability of Taiwanese and Japanese outward foreign direct investment (FDI) in China's food industry and explore the Cox proportional hazard model to examine the factors that may affect the duration and stability of FDI. Design/methodology/approach -The data used in this study come from firm-level survey conducted in different Chinese provinces. Based on the data, survival analysis on the determinants of FDI in China's food industry was constructed and used for analysis. Findings -Estimated results from the study show that the survival rates are higher for Taiwanese FDI than for Japanese FDI from 2003 to 2012. In addition, empirical results show a positive relationship between research and development (R&D) expenditure/domestic investment and the hazard rate, implying that Japanese investments with greater R&D expenditure and domestic investment would decrease the survival of FDI in China. On the contrary, Taiwanese investments with greater R&D expenditure and domestic investment would enhance the survival of FDI in China. Originality/value -It could be the first that survival comparisons across countries are conducted together in the relevant FDI studies of the food industry. For robustness, survival rates for ten major provinces and cities where affiliates conducted FDI in the food industry are examined.

Withdrawal of overseas subsidiaries from Asia: the case of the Japanese food industry

“…The availability of micro-level data on overseas subsidiaries enables us to discuss the detailed factors that affect market withdrawal such as the characteristics of subsidiaries, relationships with parent companies, and investment aims. Thus, this study complements the findings of Jian et al (2016), who study the effect of the characteristics of parent companies on withdrawal. These data are unique in that they also provide annual information on the aims of overseas investment in each subsidiary.…”

“…3. This paper does not control for the characteristics of parent companies because it is difficult to compare parent companies belonging to various industries such as manufacturing and trading. The issue is discussed by Jian et al (2016), who study the characteristics of parent companies belonging to the food manufacturing industry.…”

“…However, while Takahashi suggests that changes in the aims of overseas expansion since the late 1990s could explain such withdrawals, he does not analyze the factors behind the withdrawal of individual companies. Jian et al (2016) investigate the stability of Taiwanese and Japanese outward FDI in the Chinese food industry by examining the characteristics of parent companies. Their empirical results show that Japanese investments with greater R&D expenditure and domestic investment decrease the survival of FDI in China; however, they do not consider the characteristics of overseas subsidiaries.…”