Network Linkages and Local Embeddedness of Foreign Ventures in China: The Case of Suzhou Municipality

Abstract

Wei Y. H. D. Network linkages and local embeddedness of foreign ventures in China: the case of Suzhou municipality, Regional Studies. This paper analyses foreign direct investment (FDI) in Suzhou municipality, China, known for the Sunan model of development based on township and village enterprises. Suzhou has been remaking its development model by attracting FDI and making itself an innovative place. It is argued that local states play an important, yet diminishing, role in FDI location, with the rising significance of agglomeration effects. However, foreign ventures tend to network among themselves. They remain thinly embedded with local economies and strategic coupling rarely exists. Four mismatches – technological, structural, institutional and spatial – are proposed to explain this weak embeddedness. Suzhou's development path requires expansion of endogenous capacities.