Location choice of multinational enterprises in C hina: Comparison between J apan and T aiwan

This paper explores the location choice of multinational enterprises ( MNEs ) in C hina, shedding special light on the role of agglomeration of same‐nationality firms. We examine how this role differs according to firms' productivity. Furthermore, we compare the location choice of J apanese and T aiwanese MNEs in C hina, taking into consideration that T aiwanese MNEs experience less uncertainty in investing in C hina due to T aiwan's linguistic and cultural advantages. When considering firms' productivity, we find that less productive J apanese firms prefer to locate close to larger same‐nationality agglomerations while there are no differences in location choices in the case of T aiwanese firms.