The Dynamic Firm–Territory Nexus of Taiwanese Informatics Industry Investments in China

ABSTRACT This article explores the transformation of industrial systems in transborder investments made by Taiwanese information technology investors in China. It asks how cross‐border firms would operate in these new territories. The study found that, by and large, Taiwanese investors chose to respond strategically to the tensions in different ways at different stages. At first, regarding China as a land of cheap labor and land, they relocated the Taiwanese industrial system in such a way as to avoid disturbing the hosting regions. The situation changed as China’s market emerged confidently and opened gradually to foreign investors after the mid‐1990s. Exploring this huge new market in China provided a mandate for Taiwanese investors to prosper. They opened up their firm boundaries and added new departments of research, development, and marketing. They developed from being merely export subcontractors to producing their own brand‐name goods. In the most recent stage, Taiwanese investors have created networks to tap into local resources to support new activities. Echoing Yeung (2005) in a recent issue of this journal, this article argues that new investments change the developmental trajectories of the host regions and, at the same time, the regions imbued the incoming firms with their own regional stamp. From this perspective, location and localization decisions by cross‐strait firms may be regarded as geographically sensitive strategies whereby firms, as reflexive agents, protect and reinforce their competence through the evolution of a firm–territory nexus.