Foreign direct investment flows and urban dynamics in a developing country: a case study of Korean activities in Suzhou, China

ABSTRACT

This paper provides some new perspectives on the way that Foreign Direct Investment (FDI) influences local urban growth in recipient cities, via a case study of Korean firms in Suzhou, China. An agglomeration of firms, comprising a part of the global production network of Korean firms, provided employment in knowledge intensive manufacturing which has had significant flow-on effects expressed in the co-location of Korean service activities, and a Korean expatriate community. The paper argues that this outcome has been shaped by particular institutional settings which facilitated the agglomerations of inter-related firms and the creation of higher standards of urban liveability. The interaction of these factors means that the effect of FDI on cities can extend beyond the old image of low-wage production labour and low-cost housing, so creating a new planning agenda for cities in developing countries. The Suzhou experience provides a potential blueprint for local policy and planning responses to magnify the impact of FDI projects.

KEYWORDS:

• Foreign Direct Investment
• liveability
• Koreans
• Korean firms
• Suzhou
• Multinational Enterprises

Disclosure statement

No potential conflict of interest was reported by the authors.

ORCID

Hyung Min Kim http://orcid.org/0000-0001-9801-597X

Notes

1. There was no official statistics about Korean population in Suzhou, but the Association of Korean Merchants in Suzhou estimated there were 15,000–20,000 Korean residents (equivalent to 5,000–7,000 households, if the size of the household was 3 people). The sample size of this research represented 4–5% of the total Korean households in Suzhou.

2. The Export-Import Bank of Korea.

3. In the period 2000–2012, South Korean FDI in Suzhou accounted for 6.8%, which was the 6th largest after Taiwan (21.3%), Hong Kong (20.1%), Japan (8.6%), the USA (8.2%), and a tax heaven, Virgin Islands (7.1%) in terms of the number of FDI projects (Suzhou Statistical Yearly Boo, 2000–2012). Koreans (and Japanese) in Chinese cities are distinctive due to their largest population size in China, non-English, non-Chinese language backgrounds, and similar outward appearance with the Chinese.

4. Suzhou Industrial Park Administrative Committee, http://www.sipac.gov.cn/english/categoryreport/AuthoritiesAndPolicies/201601/t20160122_408895.htm

Additional information

Funding

This work was supported by Academy of Korean Studies [grant number AKS-2016-R08].