Survival of outward FDI in China’s food industry

The purpose of this paper is to investigate the stability of Taiwanese and Japanese outward foreign direct investment (FDI) in China’s food industry and explore the Cox proportional hazard model to examine the factors that may affect the duration and stability of FDI.

The data used in this study come from firm-level survey conducted in different Chinese provinces. Based on the data, survival analysis on the determinants of FDI in China’s food industry was constructed and used for analysis.

Estimated results from the study show that the survival rates are higher for Taiwanese FDI than for Japanese FDI from 2003 to 2012. In addition, empirical results show a positive relationship between R&D expenditure/domestic investment and the hazard rate, implying that Japanese investments with greater R&D expenditure and domestic investment would decrease the survival of FDI in China. On the contrary, Taiwanese investments with greater R&D expenditure and domestic investment would enhance the survival of FDI in China.

It could be the first that survival comparisons across countries are conducted together in the relevant FDI studies of the food industry. For robustness, survival rates for 10 major provinces and cities where affiliates conducted FDI in the food industry are examined.