Journal of Geographical Sciences >
Location choices of Chinese enterprises in Southeast Asia: The role of overseas Chinese networks
Liang Yutian (1982-), PhD and Associate Professor, specialized in economic geography and regional studies. E-mail: lytian@mail.sysu.edu.cn |
Received date: 2018-08-09
Accepted date: 2018-10-10
Online published: 2019-12-13
Supported by
National Natural Science Foundation of China(No.41871114)
National Natural Science Foundation of China(No.41401119)
Copyright
With the implementation of the “Going out” strategy and the Belt and Road Initiative, China’s investments have become increasingly influential in the global market. The contemporary literature has revealed how overseas Chinese networks and communities have actively promoted foreign investments into China over the past four decades. Whether this factor can help Chinese capital flow out once again is still ambiguous. This study examines this question by investigating Chinese corporate investments in Southeast Asia from 2001 to 2016. Through the discrete-selection logistic regression model, the study analyzes the correlation between overseas Chinese social networks and the location choices of Chinese corporate investments. The results show the following: (1) overall, there is a significant positive correlation between the population of overseas Chinese in Southeast Asian countries and the location choices of Chinese corporate investments; (2) in terms of the time sequence, the significance of the correlation is increasing, which implies that overseas Chinese have positive impacts on promoting the location choice of Chinese enterprises and that the impact is potentially increasing; and (3) in terms of the industrial structure and corporate functions, the impacts vary and are only significant in some industries and corporate segments.
LIANG Yutian , ZHOU Zhengke , LIU Yi . Location choices of Chinese enterprises in Southeast Asia: The role of overseas Chinese networks[J]. Journal of Geographical Sciences, 2019 , 29(8) : 1396 -1410 . DOI: 10.1007/s11442-019-1666-2
Table 1 Industrial structure and corporate function of Chinese investments in Southeast Asia |
Industrial classification | Number of companies | Share (%) |
---|---|---|
Leasing and business services | 2136 | 38.8 |
Financial services | 28 | 0.5 |
High-tech manufacturing | 514 | 9.4 |
Low-tech manufacturing | 1330 | 24.2 |
Medium-tech manufacturing | 728 | 13.3 |
Natural resources & energy | 445 | 8.1 |
Software & information & communications technology | 145 | 2.6 |
Transport services | 166 | 3 |
Functional classification | ||
Headquarters | 160 | 3 |
Logistics | 382 | 7 |
Production | 1152 | 21 |
Research & development | 322 | 5.9 |
Sales & marketing | 2692 | 49 |
Support & servicing | 784 | 14.3 |
Table 2 Population of overseas Chinese in Southeast Asia in 2015 |
Country | Year | Number | A proportion of the local population (%) | Tightness |
---|---|---|---|---|
Indonesia | 2015 | 10,000,000 | 3.9 | 0.001283 |
Thailand | 2015 | 9,500,000 | 14 | 0.00462 |
Malaysia | 2015 | 7,500,000 | 24.7 | 0.008172 |
Singapore | 2015 | 3,500,000 | 63.2 | 0.020898 |
Myanmar | 2015 | 1,440,000 | 2.7 | 0.000883 |
Philippines | 2015 | 1,960,000 | 1.9 | 0.000643 |
Vietnam | 2015 | 2,610,000 | 2.8 | 0.000941 |
Cambodia | 2015 | 860,000 | 5.5 | 0.001825 |
Laos | 2015 | 190,000 | 2.8 | 0.000923 |
Brunei | 2015 | 58,230 | 14.8 | 0.004548 |
Table 3 Portfolio of the proposed variables in this study |
Name | Introduction | Mean | SD |
---|---|---|---|
Number of overseas Chinese (Chinnum) | The number of overseas Chinese in a Southeast Asian country | 3,761,823 | 3,615,877 |
Overseas Chinese communities (Chincomm) | If the number of overseas Chinese in Southeast Asia is more than 3437143, the value is 1. Otherwise, it is 0. | 0.4 | 0.49 |
Ratio of overseas Chinese (Chinrate) | The number of overseas Chinese in a Southeast Asian country versus the total population of the country | 0.14 | 0.18 |
Relationship density/tightness (Network) | The product of the proportion of overseas Chinese to the total population of country i in year t and the proportion of overseas Chinese to the total population of China in that year (t=2015) | 0.004 | 0.006 |
GDP | GDP of a Southeast Asian country in 2015 (one billion USD) | 243.81 | 246.11 |
Wage cost | Annual average wage of workers in a Southeast Asian country in 2015 (USD) | 8973.6 | 9780.98 |
Corporate tax rate | Corporate tax rate for a country in Southeast Asia in 2015 | 22.35 | 3.72 |
Volume of trade | Total trade with China in 2000 (USD) | 395,215.1 | 376293.8 |
Observations: 54,920 | Investment 5492 |
Table 4 Correlation test of the independent variables |
(1) | (2) | (3) | (4) | (5) | (6) | (7) | (8) | |
---|---|---|---|---|---|---|---|---|
In Chinnum | 1 | |||||||
Chincomm | 0.4745 | 1 | ||||||
Chinrate | 0.1823 | -0.1301 | 1 | |||||
Network | 0.1805 | -0.1306 | 1 | 1 | ||||
In GDP | 0.8793 | 0.3044 | 0.2089 | 0.2072 | 1 | |||
In cost | 0.0454 | -0.1436 | 0.8434 | 0.8431 | 0.2064 | 1 | ||
Tax | 0.2173 | -0.0187 | -0.5314 | -0.5335 | 0.2247 | -0.4994 | 1 | |
In trade | 0.8834 | 0.3214 | 0.3797 | 0.3780 | 0.9637 | 0.3603 | 0.0714 | 1 |
Note: LN stands for natural logarithms. |
Table 5 Results of the mixed-logistic model for the location choices of Chinese corporate investments in Southeast Asia |
(1) | (2) | (3) | (4) | (5) | |
---|---|---|---|---|---|
In Chinnum | 0.0774*** | -0.391*** | |||
(-0.0431) | (-0.0973) | ||||
Chincomm | 0.197*** | 0.574*** | |||
(-0.0475) | (-0.106) | ||||
Chinrate | 5.294*** | ||||
(-0.228) | |||||
Network | 159.9*** | ||||
(-6.886) | |||||
In GDP | 0.0212 | -0.0601 | -0.301*** | 0.294*** | 0.294*** |
(-0.0488) | (-0.0474) | (-0.076) | (-0.0492) | (-0.0492) | |
In cost | -0.326*** | -0.419*** | -0.774*** | -1.377*** | -1.377*** |
(-0.039) | (-0.025) | (-0.0919) | (-0.0562) | (-0.0561) | |
Tax | -0.108*** | -0.106*** | -0.104*** | -0.0762*** | -0.0767*** |
(-0.00528) | (-0.00536) | (-0.00535) | (-0.006) | (-0.006) | |
In trade | 0.134** | 0.228*** | 0.685*** | -0.015 | -0.015 |
(-0.0627) | (-0.0379) | (-0.12) | (-0.0424) | (-0.0424) | |
Investments | 5492 | 5492 | 5492 | 5492 | 5492 |
Observations | 54920 | 54920 | 54920 | 54920 | 54920 |
Standard errors in parentheses | *** p<0.01, ** p<0.05, * p<0.1 |
Table 6 Regression results for Chinese corporate investments in Southeast Asia in different periods (1) |
(1) | (2) | (3) | |
---|---|---|---|
2001-2005 | 2006-2012 | 2013-2016 | |
In Chinnum | -0.594 | -0.988*** | 0.0152 |
(-0.626) | (-0.167) | (-0.126) | |
Chincomm | -0.107 | 0.687*** | 0.669*** |
(-0.655) | (-0.177) | (-0.139) | |
In GDP | 0.27 | -0.159 | -0.451*** |
(-0.478) | (-0.125) | (-0.0998) | |
In cost | -1.113* | -1.320*** | -0.339*** |
(-0.593) | (-0.157) | (-0.119) | |
Tax | -0.220*** | -0.144*** | -0.0694*** |
(-0.0326) | (-0.00835) | (-0.00729) | |
In trade | 0.649 | 1.060*** | 0.424*** |
(-0.765) | (-0.201) | (-0.156) | |
Investments | 179 | 2280 | 3033 |
Observations | 1790 | 22800 | 30330 |
Standard errors in parentheses | *** p<0.01, ** p<0.05, * p<0.1 |
Table 7 Regression results for Chinese corporate investments in Southeast Asia in different periods (2) |
(1) | (2) | (3) | ||||
---|---|---|---|---|---|---|
2001-2005 | 2001-2005 | 2006-2012 | 2006-2012 | 2013-2016 | 2013-2016 | |
Chinrate | 2.785** | 5.102*** | 5.631*** | |||
(-1.269) | (-0.342) | (-0.321) | ||||
Network | 83.28** | 153.2*** | 170.9*** | |||
(-38.21) | (-10.3) | (-9.718) | ||||
In GDP | 0.653** | 0.652** | 0.678*** | 0.677*** | -0.0048 | -0.00511 |
(-0.306) | (-0.306) | (-0.0772) | (-0.0771) | (-0.0665) | (-0.0665) | |
In cost | -1.288*** | -1.283*** | -1.414*** | -1.408*** | -1.379*** | -1.385*** |
(-0.299) | (-0.298) | (-0.0832) | (-0.0828) | (-0.08) | (-0.0801) | |
Tax | -0.227*** | -0.227*** | -0.123*** | -0.124*** | -0.0361*** | -0.0363*** |
(-0.0388) | (-0.0388) | (-0.00985) | (-0.00985) | (-0.00789) | (-0.0079) | |
In trade | -0.181 | -0.181 | -0.322*** | -0.322*** | 0.218*** | 0.218*** |
(-0.263) | (-0.263) | (-0.0654) | (-0.0654) | (-0.058) | (-0.058) | |
Investments | 179 | 179 | 2280 | 2280 | 3033 | 3033 |
Observations | 1790 | 1790 | 22800 | 22800 | 30330 | 30330 |
Standard errors in parentheses | *** p<0.01, ** p<0.05, * p<0.1 |
Table 8 Variation of the location choices in terms of industrial structure and corporate function |
(1) (Manufacturing) | (2) (Services) | (3) (Production) | (4) (Upstream and downstream ) | |
---|---|---|---|---|
In Chinnum | -0.017** | -0.708** | 0.222* | 0.493*** |
(-0.115) | (-0.182) | (-0.193) | (-0.113) | |
Chincomm | 0.0811* | 0.922*** | -0.212 | 0.719*** |
(-0.123) | (-0.202) | (-0.202) | (-0.124) | |
In GDP | -0.0876 | -0.289** | 0.362** | -0.419*** |
(-0.0932) | (-0.144) | (-0.159) | (-0.0878) | |
In cost | -0.720*** | -0.803*** | -0.761*** | -0.771*** |
(-0.105) | (-0.179) | (-0.175) | (-0.108) | |
Tax | -0.0855*** | -0.131*** | -0.124*** | -0.0990*** |
(-0.00724) | (-0.00833) | (-0.0123) | (-0.00601) | |
In trade | 0.197 | 1.050*** | -0.24 | 0.848*** |
(-0.142) | (-0.226) | (-0.24) | (-0.139) | |
Investments | 3017 | 2475 | 1152 | 4340 |
Observations | 30170 | 24750 | 11520 | 43400 |
Standard errors in parentheses | *** p<0.01, ** p<0.05, * p<0.1 |
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