PUBLICATIONS & REPORTS

Contents Introduction

Taiwan’s foreign direct investment (FDI) is undertaken with the purpose of maintaining a number of important network relations. Taiwanese firms propel their internationalization process by making maximum usage of network resources to which they have access. FDI often starts at a location close to the home base where support from the Taiwanese network can be drawn. FDI then moves on to more distant locations after investors have accumulated more network resources. Through FDI, Taiwanese firms construct a regional or even global production network to supply a set of wide-ranging, differentiated, and low-cost products, in a flexible fashion, and sometimes from near the markets. With this versatile production network, they dominate in a small segment of the niche market. They become indispensable partners for large multinational firms that perform system integration, control marketing channels and set the technological standards. This network-based FDI exhibits a high degree of local embeddedness and a high degree of local autonomy.