To Relocate Or Not to Relocate: A Logit Regression Model of Factors Influencing Corporate Headquarter Relocation Decision in China

Abstract

China’s 21st-Century Maritime Silk Road Project (involving USD1 trillion) is one of the most ambitious projects in human history. Although this trans-continental project presents tremendous development opportunities for businesses and cities within and outside China, there is nascent progress in some cities, for example, Quanzhou. With limited development prospects, enterprises are considering partial or total relocation to central cities to overcome bottlenecks and exploit future opportunities. Past relocation literature offers limited and contrasting insight into enterprise relocation’s antecedents and outcomes, especially for China. This article has attempted to fill this gap by exploring the factors affecting relocation decisions in Quanzhou using a sample of 441 employee self-reports. The logit regression model indicated that employees and cadre groups consider four factors before headquarter relocation, including preferential policies and industry environment (e.g., subsidies and tax), management resources (e.g., standardized management), intelligence and software resources (e.g., brand awareness), and international communication and market space (e.g., market openness). The intelligence and software resources were the least prioritized relocation factors among all four factors. The article presents important policy implications based on current results.

Navigating the Relocation Trend: The Rising Shift of Multinational Corporations from China to Other Countries

“…Tyll et al (2019) identify corporate restructuring and centralization of functions as key drivers, particularly in Germany. Lin et al (2021) further emphasize the role of preferential policies, industry environment, management resources, and international communication in influencing relocation decisions in China. Valentino (2019) adds to this discussion by highlighting the impact of changing national institutions on intermediary headquarters relocations, underscoring the complex interplay of economic, political, and strategic considerations in these decisions.…”

“…Furthermore, Moradlou et al (2021) and Panitz and Glückler (2022) highlight the significant impact of policy-related uncertainty, with Moradlou specifically noting the influence of market-seeking and efficiency-seeking advantages. Assabane (2021) and Lin et al (2021) further emphasize the need for companies to consider various factors, including the specifics of the relocation process and the potential benefits of smart and innovative delocalization practices. Ekhart and Breese (2022) further underscore the influence of government policies on these decisions, particularly in the context of costeffective supply chains and new technologies.…”