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Geography of Multinational Corporations and Functional Specialization in Chinese Cities


  • Canfei He

    () (Peking University)

  • Xiaojun Xiao

    () (Beijing Institute of Architectural Design)


There has been a transformation of urban structure from mainly sectoral to functional specialization. This transformation is inextricably interrelated with changes in firms' organization. Some cities host upstream functions of the value chain while others attract production and assembly. This paper investigates the tendency toward functional specialization in Chinese cities by exploring divisions in multinational corporations' (MNC) business operations in China. Based on data from Fortune Global 500 MNCs during 1979-2008, the study finds that MNCs have gradually expanded in China, both functionally and geographically. In that process, similar functions tend to agglomerate in certain cities while complementary functions co-agglomerate in others. The analysis indicates that Chinese cities may start to move toward functional specialization, with upstream functions clustering in the top tier cities of the political and economic urban hierarchy.

Suggested Citation

  • Canfei He & Xiaojun Xiao, 2011. "Geography of Multinational Corporations and Functional Specialization in Chinese Cities," Symphonya. Emerging Issues in Management, University of Milano-Bicocca, issue 1 Global .
  • Handle: RePEc:sym:journl:159:y:2011:i:1

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    References listed on IDEAS

    1. Hideki Yamawaki, 2004. "The determinants of geographic configuration of value chain activities: Foreign multinational enterprises in Japanese manufacturing," International Economics and Economic Policy, Springer, vol. 1(2), pages 195-213, January.
    2. Juan Alcácer, 2006. "Location Choices Across the Value Chain: How Activity and Capability Influence Collocation," Management Science, INFORMS, vol. 52(10), pages 1457-1471, October.
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