| Today’s labor-intensive manufacturing industry in the Taiwan area has long suffered crippling issues such as labor shortage, land resource shortage, high labor costs, and small market scale. For their long term planning and positioning, many Taiwanese manufacturing enterprises have gradually relocated their factory to China, and as a result, investing in China has become a heatedly competed battleground for these enterprises. Globally, enterprises have to face the significance of future development of the Chinese market, not only because of China’s huge population behind its labor market, but also because of its rapidly rising consumption.Some Taiwanese enterprises, which had invested early on in China market, have grown to become public traded companies, likely due to better investment returns and better government incentive policies during early stage of investing in China. Over time in the Chinese market, many foreign capital enterprises have gradually migrated from coastal cities into inland and western areas. In the mean time, these "Go West" Taiwanese enterprises have transformed themselves from business in the traditional industries in the past to key roles in modern IT industries. Taiwanese enterprises, like other foreign capital enterprises, list superior investing environment factors and encouraging government incentive policies as their reasons for migrating in Mainland China, in addition to their own investing limitations back in Taiwan,Go West and develop the western region in China provides an opportunity for the Chinese government and foreign capital to rejuvenate and achieve a renewed growth. Not only the western region in China needs foreign capitals to invest in its development, Taiwanese IT OEM firms also benefit from new business opportunities going westward. Hence, this study can be divided into four main sections:1. Through published research papers, statistical data, and a collection of studies on government policies, this study provides detailed evaluation and analysis on development strategies utilized by western regional governments to attract investments. This study, then, uses the process of selecting advantageous zone in the western region to develop a thinking flowchart to assist Taiwanese IT OEM firms in identifying their best location and timing to participate in the western region in China.2. This study conducts a questionnaire survey on Taiwanese electronic OEM firms, who are either already in China or are making arrangement to move to China. From the survey results, a thorough analysis is performed to investigate what packaged conditions and regional characteristics that these Taiwanese enterprises are looking for in investing in the western China and their willingness and demand for such investment.3. This research analyzes the factors involved in various facets faced by Taiwanese electronic OEM firms in entering the Chinese market. It also documents the packaged conditions generally found in association with investing in the western region. Based on these findings, recommendations are made for future Taiwanese electronic OEM enterprises that are considering investing in China.4. The author describes his own experience working in Mainland China and analyzes practices employed in location selection at author’s company. The company, where the author is serving, has been in business in Taiwan for about 50 years and its subsidiary in China has been in operation for almost 20 years. During these 20 years in China, the subsidiary has relocated its factory six times; each time incurred very large expenses. It has become awfully clear that strategic planning on location selection is very important for the success of an enterprise.One of the author’s companies is Panasonic Energy Company Taiwan, which has a China area subsidiary company, Paso-Better Corporation. This subsidiary is an OEM factory providing Lithium Ion Battery Packs for Panasonic/Sanyo Group of Japan. Paso-Better provides its Japanese customers with high quality products, low costs, efficient and flexible production lines, and localized customer and after-sale services.This paper studies "strategic location selection" for Taiwanese IT OEM firms in Mainland China market. It also points out how Taiwanese IT OEM firms, including Paso-Better Corp., can use strategic location selection and industry transformation, in combination with their own strength and weakness analysis, and tailored government incentive plan to maintain and improve competitive advantages in the Chinese market. This paper is divided into eight chapters:Chapter 1:Introduction. This chapter describes issues raised in the thesis and discusses various theories and background analyses. Setting up shops in China is becoming an urgent task for many Taiwanese enterprises. Further expansion in China and moving westward into inland areas in China are stepping stones for them to compete in the extremely competitive global market. Western region play an important role in China and are expected to rejuvenate rapidly growing Chinese economy.Chapter 2:Theory and Literature Review. A variety of theories on location selection are elaborated and related literatures reviewed. This chapter discusses further on regional strategies and introduces packaged incentive policies offered by the western region. At the end, the strategic importance of the western region and a comparison of its difference and uniqueness with other region are presented.Chapter 3:Research Design. This research is constructed from data collected through a survey investigation. The survey focuses on companies’fundamental data, motivation for moving westward, regional characteristics of western region, and corporate willingness to move westward. Data collected through the survey is analyzed using a T-type chart to deduce factors that affect corporate decision on moving westward.Chapter 4:IT OEM/ODM Definition and Industry Analysis. This chapter examines the relationship between Original Design Manufacturing (ODM) and original equipment manufacturing (OEM), and performs an industry analysis on Taiwanese companies participating in the field of Information Technology (IT). Strategic methods employed by successful Taiwanese companies to gain competitive advantages are discussed.Chapter 5:Western China Strategic Development and Analysis. Various regions in China are discussed. Which areas are considered "western region", the characteristics of that region that make it competitive, and the reasons that Taiwanese enterprises choose to invest in the western region are elaborated. Furthermore, what competitive advantages each region in China needs to possess in order to attract investments by foreign capital are discussed.Chapter 6:Survey and Data Analysis. This chapter first discusses survey sample structure. Then, it analyzes corporate willingness to invest in the western region in ranking of factors and timing. The reasons that corporations are not willing to invest in the western region are also reviewed. Geographic region as a factor for considering corporate investment is further discussed.Chapter 7:Case Study. Five case studies are used to analyze recent economic development at Chongqing and the regional advantages the city possesses. The story of one company, which has its beginning in Taiwan, later set up subsidiary in China first located at Suzhou then later moved to Chongqing, is used to illustrate the challenges faced by Taiwanese IT OEM companies investing in China and the location selection process the company used to improve its competitive advantages.Chapter 8:Conclusion and Recommendation. Findings from this research are concluded. Recommendations are made for China’s policy to develop its western region and for Taiwanese enterprises considering that region. In summary, various regions in China offer their own unique policies tailored to attract certain types of investment. It is critical for companies contemplating China for investment to include key factors such as the where, which region is a best fit for them, and the when, the best timing to capture what the region offers, in their decisions for making such investment.
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