Entry Mode and Location of Foreign Manufacturing Enterprises in China

Foreign investors in China may choose between three modes of entry: equity joint ventures (EJVs), contractual joint ventures (CJVs), or wholly foreign owned enterprises (WFOEs). Those entry modes vary considerably in their legal forms, risk characteristics, resource commitments, and investment motivations. This paper evaluates and compares their locational patterns, and reveals similarities and differences in their locational behaviors. A regression model is developed to explain the distinctive locational patterns of these modes of entry, providing results that may serve both to guide locational decisions of potential investors, and provide scientific support for local governments in designing FDI policies. Journal of Economic Literature, Classification Numbers: F21, F23, R30. 5 figures, 3 tables, 40 references.