Functional division and location choices of Chinese outward FDI: The case of ICT firms. (August 2021)

• Record Type: Journal Article
• Authors: Wang, Junsong; Wei, Yehua Dennis; Lin, Bingquan
• Is Part Of: Environment and planning. Volume 53:Number 5(2021)
• Page Start: 937
• Page End: 957
• Publication Date: 2021-08
• Subjects: Outward FDI -- location choice -- functional division -- ICT -- China; City planning -- Periodicals; Regional planning -- Periodicals; City planning; Regional planning; Periodicals; 333.7
• DOI: 10.1177/0308518X20973016
• Languages: English
• ISSNs: 0308-518X

Abstract

This study analyzes how political factors, cultural and geographical distance, and agglomeration affect the distribution of Chinese outward foreign direct investment (OFDI) through a study of information and communication technologies (ICT) firms using nested logit models. The results show that ownership, Chinese ethnic networks, and sectoral agglomeration are the most important factors. Political risk does not have a consistent effect on OFDI, state-owned enterprises are inclined to invest in countries with a higher level of political risk. We also find that various functions display different locational preferences and that there is a clear trend toward vertical agglomeration among various functions. By integrating place-based political institutions and space-based cultural and geographical distance into the research, our study unfolds the complexity of location decisions regarding Chinese OFDI. It highlights the importance of national, industrial, and functional idiosyncrasies in determining OFDI location choices.