The Location of Japanese Investments in China: Agglomeration Effects, Keiretsu, and Firm Heterogeneity

Conditional logit analysis of locational choices by Japanese electronics manufacturers in China's regions and provinces during 1990-1995 confirms a major impact of general industry. Japanese, and keiretsu-specific agglomeration benefits. The effects of key determinants of locational choice vary Substantially by investor size and market orientation of manufacturing plants. Small and medium-sized enterprises are more sensitive to Japanese agglomeration and prefer locations closer to Japan than larger firms. but appear to benefit less from region-specific investment incentives. Export-oriented plants are more responsive than local-market-oriented plants to Japanese (keiretsu) agglomeration and the presence of seaports, but appear less responsive to regional demand and region-specific incentives. J. Japan. Int. Econ., June 2002, 16(2), pp. 194-211. Department of Management Science, Faculty of Economics and Business Administration, Maastricht, University, P.O. Box 616, 6200 MD Maastricht, The Netherlands