The relationship between the existence of MNEs and regional agglomeration in China

The trend of globalization in China has become more obvious since the China market started to its open policy. Due to open policy, many foreign multinational corporations/enterprises (MNCs/MNEs) start to pay attention on China huge market. MNEs firstly enter China market by various activities, such as trade, technology transfer, licensing for manufacturing, or foreign direct investment. MNEs also establish their business centres in main economic regions so that they can base on the centre for extending markets. The main economic regions are mostly distributed the south China, such as Guandong, in which the better regional economic infrastructure has been established (Bao et al., 2002; Renard, 2002). Therefore, theses regions, comparing to the western or Northern China, attract more FDI and create more local industrial development. This study emphasizes on explaining how the existence of MNEs bring influences on regional economic activities. Next section, we summarize the literature about MNE’s location decision and agglomeration. In the third section, we describe the data and methodology applied for explaining the relationship between MNE’s existence and regional agglomeration. The fourth section shows the results and the implications of the empirical statistics. At last, we summarize conclusions and limitations.