This study investigates the interactions between provincial characteristics and foreign-specific agglomerations on Taiwanese investors' location choice in China. Using firm-level data, we find that nationality agglomeration and Asian agglomeration have non-negligible impacts on these investors. Furthermore, we find that their location choice follows a sequential selection process. These findings suggest that a region-wide development strategy is a more effective means of attracting these investors than province-specific fiscal concessions and preferential treatment.

We investigate the effects of provincial characteristics on the distribution of Taiwanese investment in China. For the period 1996-2005, we find that the distribution of this investment can be attributed to the effects of industrial linkages, labour-market pooling and monitoring costs. Furthermore, we find evidence that the determinants of this investment not only differ across regions, but also change over time. Importantly, we find mild evidence that this investment is adversely affected by a market-crowding effect.

This paper seeks to explain uneven distribution of Taiwanese direct investment in China. Using firm-level data, we find that such a pattern can be attributed to different characteristics of key economic regions. Furthermore, we find evidence that the probability of a province being selected by a Taiwanese investor increases with the extent of industrial linkages and labour-market pooling. Importantly, we find evidence that the structure of the Retail and Service industry's location choice is markedly different to its Manufacturing counterpart.