Geography of Multinational Corporations and Functional Specialization in Chinese Cities


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.


Functional Specialization; Functional Location; Multinational Corporations; China

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