ABSTRACT
This study attempts to explain a new kind of foreign direct investment (FDI) to China that is not labour-intensive but knowledge-intensive. Since IBM first established their wholly owned IBM Research China in Beijing in 1995, well-known multinational corporations (MNCs) such as Intel, Microsoft, Nokia, Ericsson, SAP, Samsung and Matsushita all started to set up their research laboratories in China. According to the recent United Nations Conference on Trade and Development (UNCTAD) survey, 60.9 per cent of the company responses choose China as the most attractive location for future foreign research and development (RampentityD) investment, which exceeds the USA (40.6 per cent) (United Nations, 2005: 13). This unusual case of a developing country becoming a potential new ‘centre of excellence’ in the MNC global innovation networks needs some explanation.
