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The Location Decisions of Foreign Logistics Firms in China : Does Transport Network Capacity Matter?

Author

Listed:
  • Anthony Chin

    (SCAPE)

  • Hong Junjie

Abstract

In recent years the logistic needs have created tremendous pressure on the hard transport infrastructure. Logistics and the harness of information technology are the key facilitators of mobility. The Chinese logistics market is still in its infancy and creates tremendous opportunities for investors. It recognized as one of important driving forces both for national economy and business. Beijing, Tianjin, Shanghai, Shenzhen and Guanzhou aspire to be regional or international logistics hubs and have adopted preferential policies in attracting FDIs in logistics. From 1996 to 2001, foreign capital invested in transportation, storage, post and telecommunications increased from USD6.96 billion to USD15.16 billion. This study looks at the location decisions of foreign logistics firms and identifies with the aid of a multinomial logit model factors that are crucial in attracting them to China. This is important as they have an important role to play in filling in the gap left by traditional Chinese firms, which largely concentrate, on warehousing and distribution. The results suggest that location of logistics firms depends on transport infrastructure, market size, labor quality and cost, agglomeration economies, communication cost, economic privatization degree, as well as government incentives. The importance of the above factors varies by source of region. European and North American firms favor higher population densities, lower labor cost, convenient airway transport and large cities while logistics firms from Hong Kong, Macao and Taiwan put more emphasis on communication infrastructure.

Suggested Citation

  • Anthony Chin & Hong Junjie, 2005. "The Location Decisions of Foreign Logistics Firms in China : Does Transport Network Capacity Matter?," Trade Working Papers 22568, East Asian Bureau of Economic Research.
  • Handle: RePEc:eab:tradew:22568
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    File URL: http://www.eaber.org/node/22568
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    References listed on IDEAS

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    Cited by:

    1. Youngsoo An & Li Wan, 2019. "Monitoring Spatial Changes in Manufacturing Firms in Seoul Metropolitan Area Using Firm Life Cycle and Locational Factors," Sustainability, MDPI, vol. 11(14), pages 1-22, July.
    2. Y Nguyen CAO, 2021. "Modeling Logistic Enterprise Re-Location Decision By A Nested Logit Model," Regional Science Inquiry, Hellenic Association of Regional Scientists, vol. 0(1), pages 49-57, June.
    3. Y Nguyen CAO, 2020. "Modeling Logistic Enterprise Re-Location Decision By A Nested Logit Model," Regional Science Inquiry, Hellenic Association of Regional Scientists, vol. 0(2), pages 55-68, June.
    4. Youngsoo An & Yeonggyeong Kang & Seungil Lee, 2014. "A study on the impact of soft location factors in the relocation of service and manufacturing firms," International Journal of Urban Sciences, Taylor & Francis Journals, vol. 18(3), pages 327-339, November.

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    More about this item

    Keywords

    logistics; transport infrastructure; investment;
    All these keywords.

    JEL classification:

    • H54 - Public Economics - - National Government Expenditures and Related Policies - - - Infrastructures
    • P33 - Political Economy and Comparative Economic Systems - - Socialist Institutions and Their Transitions - - - International Trade, Finance, Investment, Relations, and Aid

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