A study on MNE's intra-firm trade strategies and export competitiveness: evidence from Taiwan's and Japan's subsidiaries in China

Abstract

Because of the increasing integration of the Greater China, this report is designed first to analyse the intra-firm trade strategies of Taiwan MNE's subsidiaries in China and due to the high performance of Japan's MNE in international industrial competitiveness, the Japan MNE's subsidiaries in China are included for comparison. The entry strategies in the Greater China market are found identical for both Taiwanese and Japanese manufacturing MNEs which carry out the intra-firm trade strategies with the purposes of maximising the effect of export substitution and at the same time bearing better effect of export creation. Moreover, the results reveal that investments from Japan MNE's subsidiaries in China can create better effect of export creation than that of Taiwan's. In the mean time, both Taiwan MNE's and Japan MNE's subsidiaries in China have substantially increased the degree of local contents by purchasing materials, parts and semi-products more from the local than from their home countries.