How headquarters relocation is affected by rising wages and ownership: Evidence from China's annual survey of industrial enterprises, 1999–2008
Industrial wages have increased significantly in China in recent years. At the same time, there have been widening gaps in wages across provinces. These trends are likely to prompt company headquarters to relocate. The relocation choices of headquarters are likely to change under different ownership...
| Main Authors: | , , , |
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| Format: | Artículo preliminar |
| Language: | Inglés |
| Published: |
International Food Policy Research Institute
2016
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| Subjects: | |
| Online Access: | https://hdl.handle.net/10568/147762 |
| _version_ | 1855542071963680768 |
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| author | Wang, Qingtao Chen, Kevin Z. Chiang, Longwen Xie, Xuanli |
| author_browse | Chen, Kevin Z. Chiang, Longwen Wang, Qingtao Xie, Xuanli |
| author_facet | Wang, Qingtao Chen, Kevin Z. Chiang, Longwen Xie, Xuanli |
| author_sort | Wang, Qingtao |
| collection | Repository of Agricultural Research Outputs (CGSpace) |
| description | Industrial wages have increased significantly in China in recent years. At the same time, there have been widening gaps in wages across provinces. These trends are likely to prompt company headquarters to relocate. The relocation choices of headquarters are likely to change under different ownership, as a result of variations in their internal capabilities as well as the distinctive nature of their businesses. This paper is the first attempt to examine the effects of rising wages on headquarters’ relocation by ownership. Data were obtained from the China Statistical Yearbook and the Annual Survey of Industrial Enterprises for the period 1998 through 2008. These data allow for differentiation among companies with regard to five types of enterprises: foreign owned, Sino-foreign owned, state owned, domestically joint owned, and privately owned. We use a conditional logit model to identify factors to determine which province headquarters chose to relocate. In addition, we consider the impact of these choices on the “minimum wage standard” introduced in 2004. Results indicate that wages insignificantly affected the relocation choice of all types of headquarters before 2004. After 2004, on average, headquarters were more likely to relocate to low-wage provinces, as predicted by “overall cost leadership.” However, we also find that relocation choices are significantly affected by ownership type. While privately owned and state-owned enterprises are likely to relocate to areas with lower wages, foreign-owned headquarters tend to relocate to high-wage areas, as predicted by the “efficiency wage theory.” Wages did not affect the relocation choices of Sino-foreign-owned companies, but had a negative effect on those of domestically joint-owned headquarters. |
| format | Artículo preliminar |
| id | CGSpace147762 |
| institution | CGIAR Consortium |
| language | Inglés |
| publishDate | 2016 |
| publishDateRange | 2016 |
| publishDateSort | 2016 |
| publisher | International Food Policy Research Institute |
| publisherStr | International Food Policy Research Institute |
| record_format | dspace |
| spelling | CGSpace1477622025-11-06T07:24:50Z How headquarters relocation is affected by rising wages and ownership: Evidence from China's annual survey of industrial enterprises, 1999–2008 Wang, Qingtao Chen, Kevin Z. Chiang, Longwen Xie, Xuanli wages ownership industrialization Industrial wages have increased significantly in China in recent years. At the same time, there have been widening gaps in wages across provinces. These trends are likely to prompt company headquarters to relocate. The relocation choices of headquarters are likely to change under different ownership, as a result of variations in their internal capabilities as well as the distinctive nature of their businesses. This paper is the first attempt to examine the effects of rising wages on headquarters’ relocation by ownership. Data were obtained from the China Statistical Yearbook and the Annual Survey of Industrial Enterprises for the period 1998 through 2008. These data allow for differentiation among companies with regard to five types of enterprises: foreign owned, Sino-foreign owned, state owned, domestically joint owned, and privately owned. We use a conditional logit model to identify factors to determine which province headquarters chose to relocate. In addition, we consider the impact of these choices on the “minimum wage standard” introduced in 2004. Results indicate that wages insignificantly affected the relocation choice of all types of headquarters before 2004. After 2004, on average, headquarters were more likely to relocate to low-wage provinces, as predicted by “overall cost leadership.” However, we also find that relocation choices are significantly affected by ownership type. While privately owned and state-owned enterprises are likely to relocate to areas with lower wages, foreign-owned headquarters tend to relocate to high-wage areas, as predicted by the “efficiency wage theory.” Wages did not affect the relocation choices of Sino-foreign-owned companies, but had a negative effect on those of domestically joint-owned headquarters. 2016-12-23 2024-06-21T09:23:17Z 2024-06-21T09:23:17Z Working Paper https://hdl.handle.net/10568/147762 en https://hdl.handle.net/10568/146405 https://hdl.handle.net/10568/147730 Open Access application/pdf International Food Policy Research Institute Wang, Qingtao; Chen, Kevin Z.; Chiang, Longwen; and Xie, Xuanli. 2016. How headquarters relocation is affected by rising wages and ownership: Evidence from China's annual survey of industrial enterprises, 1999–2008. IFPRI Discussion Paper 1593. Washington, DC: International Food Policy Research Institute (IFPRI). https://hdl.handle.net/10568/147762 |
| spellingShingle | wages ownership industrialization Wang, Qingtao Chen, Kevin Z. Chiang, Longwen Xie, Xuanli How headquarters relocation is affected by rising wages and ownership: Evidence from China's annual survey of industrial enterprises, 1999–2008 |
| title | How headquarters relocation is affected by rising wages and ownership: Evidence from China's annual survey of industrial enterprises, 1999–2008 |
| title_full | How headquarters relocation is affected by rising wages and ownership: Evidence from China's annual survey of industrial enterprises, 1999–2008 |
| title_fullStr | How headquarters relocation is affected by rising wages and ownership: Evidence from China's annual survey of industrial enterprises, 1999–2008 |
| title_full_unstemmed | How headquarters relocation is affected by rising wages and ownership: Evidence from China's annual survey of industrial enterprises, 1999–2008 |
| title_short | How headquarters relocation is affected by rising wages and ownership: Evidence from China's annual survey of industrial enterprises, 1999–2008 |
| title_sort | how headquarters relocation is affected by rising wages and ownership evidence from china s annual survey of industrial enterprises 1999 2008 |
| topic | wages ownership industrialization |
| url | https://hdl.handle.net/10568/147762 |
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