Chinese firms' R&D “Going Out”: Determinants for location choice

Based on a dataset on 1500 Chinese firms, which established overseas R&D subsidiaries in the recent 5 years (2010-2014), we investigate the development trends of the Chinese firms' overseas R&D investment, whether and how it differs from the overseas R&D investment peak led by the Multinational Corporations (MNCs) in the developed countries in the past century. Drawing on Dunning's eclectic paradigm, we establish a theoretical framework: the locational advantage of host countries are analyzed in their effect on Chinese firms' establishment of overseas R&D subsidiaries. We also consider how the interaction between the host countries and China, which consists of geographic and cultural distance, moderate the relations between the host countries' advantages and Chinese firms' locational choice, integrating Uppsala model and Geert Hofstede's National Cultural theory into Dunning's eclectic paradigm. A dataset consisting 49 representative host countries and the multiple regression method are employed to test the related hypothesis. We find that the Chinese firms' R&D “Going Out” is strongly oriented by the overseas market; although the “knowledge seeking” is also a major incentive, this orientation is comparatively less strong, and is further weakened by the barriers created by geographic and cultural distance.