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Uncertainties, Imitative Behaviours and Foreign R&D Location: Explaining the Over-concentration of Foreign R&D in Beijing and Shanghai within China

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  • YIFEI SUN
  • KE WEN

Abstract

This study examines the location of foreign research and development (R&D) establishments in China and reveals that such facilities are overly concentrated in Shanghai and Beijing, the two first- tier cities. We argue that the spatial concentration of R&D in Shanghai and Beijing is more intense than what can be expected based on the spatial concentration of foreign investment, science and technology resources and general economic activities. The spatial concentration is also greater than what is observed in more developed countries. This degree of concentration cannot be convincingly explained by the conventional, rational choice model that relies mostly upon factors such as market size, labour costs and infrastructure, among others. Our analysis suggests that site location decisions are also the product of imitative behaviours among decision makers faced with uncertainties and multiple risks, particularly in a transitional economy such as China's. We further discuss the implications for second-tier cities in competition for foreign R&D investment, suggesting that these cities should aggressively market their cities to foreign investors in order to reduce the perceived risks undermining their ability to attract R&D. We also speculate that as foreign investors become more knowledgeable about the rest of China, more companies will begin to establish R&D facilities in such second-tier cities.

Suggested Citation

  • Yifei Sun & Ke Wen, 2007. "Uncertainties, Imitative Behaviours and Foreign R&D Location: Explaining the Over-concentration of Foreign R&D in Beijing and Shanghai within China," Asia Pacific Business Review, Taylor & Francis Journals, vol. 13(3), pages 405-424, July.
  • Handle: RePEc:taf:apbizr:v:13:y:2007:i:3:p:405-424
    DOI: 10.1080/13602380701291966
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    References listed on IDEAS

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    1. Kathleen A. Walsh, 2007. "China R&D: A High-Tech Field of Dreams1," Asia Pacific Business Review, Taylor & Francis Journals, vol. 13(3), pages 321-335, July.
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    Cited by:

    1. Harald Bathelt & Gang Zeng, 2014. "The Development of Trade Fair Ecologies in China: Case Studies from Chengdu and Shanghai," Environment and Planning A, , vol. 46(3), pages 511-530, March.
    2. Maurice CATIN & Christophe VAN HUFFEL, 2008. "CLUSTERS ET STRATeGIES DE DeVELOPPEMENT EN CHINE," Region et Developpement, Region et Developpement, LEAD, Universite du Sud - Toulon Var, vol. 28, pages 39-60.
    3. Kroll, Henning & Schiller, Daniel, 2009. "Managing the interface between public sector applied research and technological development in the Chinese enterprise sector," Discussion Papers "Innovation Systems and Policy Analysis" 17, Fraunhofer Institute for Systems and Innovation Research (ISI).
    4. Li, Xiaoying & Wang, Jue & Liu, Xiaming, 2013. "Can locally-recruited R&D personnel significantly contribute to multinational subsidiary innovation in an emerging economy?," International Business Review, Elsevier, vol. 22(4), pages 639-651.
    5. Inge Ivarsson & Claes Göran Alvstam, 2017. "New technology development by Swedish MNEs in emerging markets: the role of co-location of R&D and production," Asian Business & Management, Palgrave Macmillan, vol. 16(1), pages 92-116, April.
    6. Alexander Brem & Pierre Wolfram, 2017. "Organisation of new product development in Asia and Europe: results from Western multinationals R&D sites in Germany, India, and China," Review of Managerial Science, Springer, vol. 11(1), pages 159-190, January.
    7. Quey-Jen Yeh & Xiaojun Xu, 2010. "The Effect of Confucian Work Ethics on Learning About Science and Technology Knowledge and Morality," Journal of Business Ethics, Springer, vol. 95(1), pages 111-128, August.
    8. Tingyong Zhong & Yimeng Zuo & Fangcheng Sun & Jeoung Yul Lee, 2020. "Customer Concentration, Economic Policy Uncertainty and Enterprise Sustainable Innovation," Sustainability, MDPI, vol. 12(4), pages 1-20, February.

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