The objective of this thesis is to explore the development strategy and location factors that affect on Taiwanese firms' investment in China's western region. In the first step of this research, we review literature and analyze China's strategy of western region. Main theories adopted in this study include "Regional Growth Theory", "Location Theory", and "Location Policy". In the second step, we adopt questionnaire survey to analyze the intention of Taiwanese firms' investment in China's western region. The statistical analysis of questionnaire data includes the use of t-test, ANOVA-test, Likert's summated scale analysis, factor analysis, and cluster analysis. They examine the relationship and effectiveness between the location selection and intention of Taiwanese firms' investment in China's western region. Through this research, the conclusions of this thesis are as following: firstly, the strategy " Spot-Axle Model" is adopted for the development of western region. Therefore, the location with railway has high priority in western development. Secondly, a total of 585 questionnaires were mailed to 12 industries of Taiwanese firms in China, out of which 78 firms were responding and 70 of them were valid questionnaires. The results of questionnaire survey are presented below: 1) In Taiwanese firms' views, the Sichuan Province, Chongging Municipality, Yunna Province, and Shaanxi Province are the best regions to investment for China's western region. And the best timing is during the period of 2001-2010s. 2) The certainty factors that affect on investment are labors, property policies, communications, and infrastructure. And market is an uncertainty factor. 3) They are different consideration by Taiwanese firm for the choice of locations between eastern region and western region. Taiwanese firms attach importance to market and labor factors in the eastern region. And the infrastructure, communication, preferential policies are the important factors in the western region. 4) According to the factor analysis, 76% of investment considerations can be explained by 10 factors, including quantity and price of labor and land, communications, public facilities, cultures, agglomeration, markets, minerals, policies, economics, and nature environment, which are selected from 36 factors included in this study. 5) We use cluster analysis to analyze the choice of location by Taiwanese firms. The results show that 58.6% samples belong to the category of "quantity and price of labor and land¡Vmarket oriented", and 18.6% samples belong to "nature¡Vinfrastructure oriented".

Due to the unusual political and economic ties across the Strait, the trade between Taiwan and Mainland China, as two independent economic entities, can be regarded as special ¡§state-to-state¡¨ trade. Logically, Taiwanese enterprises, which have invested in Mainland China, can also be defined as special Multinational Corporates¡]MNC¡^. The utmost aims of international capital flows include lowering costs and exploiting new marketplaces. The mature industries in developed economies have been losing their competitive advantages in cost and marketing, while the developing economies are usually able to provide those MNCs with more potential markets and lower operation costs. Therefore, the enterprises in developed economies can alternatively keep their competitive edges by making use of cross-border operations and capital flows. Under the frameworks of International Product Life Cycle (IPLC) and the Diamond Model, the study aims to interpret the motivations of the capital flows and the investment location determinations among Taiwan and the economic regions in Mainland China. Want-Want group, denoted as a successful Taiwan firm in Mainland China, enjoys prosperous experiences in that market. The group categorized as food industry, which falls in the mature period of product life cycle in Taiwan. Hence, the study takes it as an example to illustrate the application of the IPLC theory in the Mainland China, and to interpret the investment local determinants by the conditions illustrated by the Diamond Model. The study has scrupulously examinated the history of Want-Want group investing at Taiwan and various economic regions in China. The findings are that when multinational corporations make foreign direct investments, the Product Life Cycle theory and Diamond Model theory can appropriately interpret the motivation and location selection respectively.