The Study Of Taiwanese Electronics Industry Location Selection In China

Recently, there are an increasing proportion of Taiwanese corporations that invest in Mainland. These corporations are mainly concentrated in three areas, including Yangtze River delta, Pearl River delta, and Bo Hai Coastal Region. Other areas in China have encountered a comparative less amount of investment. This research attempts to use MaFadden's Multinomial logit model to find out the electronic industrial location choice factors of electronic companies who invested in Mainland. And check out that if main location determinant factor is Agglomeration Economies. Logic models have often been used to describe location choice problem in many studies, however the location alternatives have not been appropriately defined and modeled. This would result in biased estimates. Therefore, in this paper we will identify a proper size variable in the utility function to reflect the problem of the size of aggregation alternatives. Moreover, we will adopt random sampling to deal with problem of too many alternatives.The empirical analysis was done using the data from 2005 companies who set electronic factories in China. We set provinces that were actual invested by those companies in 2005 as alternatives, including Beijing, Tianjin, Shanghai, Jiangsu Province, Zhejiang Province, Fujian Province, Hubei Province, Guangdong Province and Chongqing. And analyze their location choice factors,including wage, R&D, market, size variable, distance and infrastructure. Estimation results include wage, local market and agglomeration economies affecting location of investment by Taiwanese companies.Since this study focused on location choices of Taiwanese corporations that invest in Mainland, therefore the researcher ignored the association between Taiwanese and foreign companies. Particularly, in IT industry, the integration of agglomeration economies and vertical chains, upstream and downstream manufacturers could be established by transnational corporations; therefore, the information used in this research could not mirror the effects of it.