How Much Does Industry Structure Impact Foreign Direct Investment in China?

Industry structure imperfection in a foreign market is an important factor which not only makes foreign direct investment (FDI) preferable to trade or licensing but also determines the attractiveness of one host country over others. Today, the structural transformation of transitional economies provides transnational investors with tremendous preemptive opportunities. Since the understanding of the linkage between industry structure and FDI in the context of transitional economies is incomplete, this study provides a "structural attributes" model and assesses the direction and magnitude of performance implications of industry structural factors for FDI in China. Based on a cross-sectional empirical analysis, this work observes a significant impact of structural factors on market and financial performance in international production. Managerial implications for transnational investors are highlighted.