An Exploratory Investigation of International Pharmaceutical Firms' FDI Decision into China: A Comparison Between Eastern Firms and Western Firms

This paper investigated the determinants of international pharmaceutical firms' foreign direct investment (FDI) into the Chinese pharmaceutical manufacturing industry during the period from 1980 to 1998. The analysis of 43 cases showed that international pharmaceutical firms' FDI into China were predominantly driven by China's specific location factors. China's market size with its great potential played the most important role. China's rapid economic development & growth and its open-door policy were other two important determinants. Relative stable political conditions and incentive policies provided by China were also considered as important factors. The impact of relatively stable political conditions in China on western pharmaceutical firms' FDI into China was significantly greater that that on eastern firms'. Incentive policies provided by China received more attention from eastern firms.