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Transnational Corporations and ‘Obligated Embeddedness’: Foreign Direct Investment in China's Automobile Industry


  • Weidong Liu

    (Institute of Geographical Sciences and Natural Resources Research, Chinese Academy of Sciences, Beijing, 100101, China)

  • Peter Dicken

    (School of Environment and Development, University of Manchester, Manchester M13 9PL, England)


With the aid of an empirical case study of the automobile industry in China, we explore how, under certain political–economic conditions, the investments of transnational corporations (TNCs) can be shaped to meet the state's objectives. We develop the concept of ‘obligated embeddedness’ to capture the dynamics of this process. We show that foreign direct investment in the automobile industry in China is a type of market-led and embedded investment which is characterised by joint ventures and the follow-up network configurations. However, to achieve such obligated embeddedness on the part of TNCs—and for the state and its citizens to gain its benefits—the state not only has to have the theoretical capacity to control access to assets located within its territory, but also the power actually to determine such access.

Suggested Citation

  • Weidong Liu & Peter Dicken, 2006. "Transnational Corporations and ‘Obligated Embeddedness’: Foreign Direct Investment in China's Automobile Industry," Environment and Planning A, , vol. 38(7), pages 1229-1247, July.
  • Handle: RePEc:sae:envira:v:38:y:2006:i:7:p:1229-1247

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    Cited by:

    1. Sivakumaran, Thillai & Sprenger, Philipp & Toth, Michael & Henke, Michael, 2015. "Market Barrier Integrated Approach for Manufacturing Footprint Decision Support," Chapters from the Proceedings of the Hamburg International Conference of Logistics (HICL), in: Kersten, Wolfgang & Blecker, Thorsten & Ringle, Christian M. (ed.), Sustainability in Logistics and Supply Chain Management: New Designs and Strategies. Proceedings of the Hamburg International Conference of Logistics , volume 21, pages 121-151, Hamburg University of Technology (TUHH), Institute of Business Logistics and General Management.
    2. Crispian Fuller & Nicholas A Phelps, 2018. "Revisiting the multinational enterprise in global production networks," Journal of Economic Geography, Oxford University Press, vol. 18(1), pages 139-161.
    3. Guanie Lim, 2014. "The Internationalisation of Mainland Chinese Firms into Malaysia: From Obligated Embeddedness to Active Embeddedness," Journal of Current Southeast Asian Affairs, Institute of Asian Studies, GIGA German Institute of Global and Area Studies, Hamburg, vol. 33(2), pages 59-90.
    4. Wang, Cassandra C. & Wu, Aiqi, 2016. "Geographical FDI knowledge spillover and innovation of indigenous firms in China," International Business Review, Elsevier, vol. 25(4), pages 895-906.

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