Impact Studies of Foreign Enterprises in China (I)

Based on the survey responses of 112 operating foreign enterprises in the city of Qinghuandao, this study finds that the highest ranked motives for foreign investments in China are principally concerned with cheap labor and resources and the vast market. The primary factors determining them to locate in the city include the access to transportation facilities, physical input costs, investment incentives, proximity to the Beijing and Tianjin market, and environmental consideration. Nonparametric tests reveal that the relative importance of motives for foreign investments in China vary most with their starting time and exporting status, to a moderate extent with sector of investment, country of origins and entry mode. Only weak support for the hypothesis that locational factors in Qinghuandao vary by characteristics of foreign enterprises is found. This indicates that foreign investors select the city to exploit the similar locational advantages. The survey responses compare fairly consistent with results derived from many econometric models.