Administrative boundary effects of cross-border migration of manufacturing firms: a case study from the Pearl River Delta in China

Abstract

This study, based on the migration trajectories of 468 representative manufacturing leading enterprises in nine prefecture-level cities in the Pearl River Delta region (Shenzhen, Dongguan, Huizhou, Guangzhou, Foshan, Zhaoqing, Zhuhai, Zhongshan, Jiangmen) since 2000, employs spatial econometric and social network analysis techniques to analyze the overall spatial patterns, key migration regions, and typical cases of manufacturing enterprise migration. It attempts to explain whether various administrative boundaries have influenced the relocation and siting choices of enterprises. The study analyzes cross-boundary migration behavior of enterprises at both inter-prefecture-level and intra-prefecture-level levels. The analysis among prefecture-level cities adopted all enterprise samples of the 9 cities, while the analysis within the city only adopted partial enterprise samples of Shenzhen.

The study finds that: (1) Although the urban space in the Pearl River Delta region has developed highly continuously, with material spatial boundaries becoming increasingly blurred, relatively few enterprises choose to migrate across prefecture-level boundaries. Enterprise migration exhibits a significant "boundary wall" effect at the municipal administrative unit level. Instead, within prefecture-level cities, enterprise migration is more frequent. (2) Cross-boundary areas are key regions for enterprise relocation. Enterprises migrate from the central area to the periphery to seek lower production factor costs, but are unwilling to relocate to adjacent cities for even greater cost compression. (3) County and street boundaries within cities do not restrict enterprise migration, allowing enterprises to flow relatively freely within the city.

The study analyzes the reasons for the above spatial phenomena: (1) Under the Local government corporatism model, retaining tax-generating enterprises is key to promoting local economic growth. Governments commonly take multiple measures to retain enterprises, including providing preferential land supply, tax breaks, and infrastructure support. These measures aim to encourage enterprises to establish long-term development in the region. (2) In their development process with localities, enterprises form close social network connections with local production networks. These connections include not only explicit industrial chain and supply chain relationships, but also employee-specific urban localization needs such as education and healthcare. This stable embeddedness is an important reason for reducing enterprise cross-prefecture-level migration. (3) Cross-city migration for enterprises may come with significant uncertainties, especially due to differences in business environments across cities. These differences can result in significant adaptation costs for enterprises in a new city.

Therefore, the study suggests that within China's mega-regions, cross-boundary areas between prefecture-level cities will become new feature regions for the clustering of industrial and innovative factors. Cross-boundary flows of factors will strengthen functional complementarity among cities. It is essential to strengthen research on industrial development in cross-boundary regions and industrial spatial planning.

It should be noted that the enterprise migration data obtained in this study only refer to the relocation processes of enterprise headquarters. The complex relationships between branch offices and headquarters as well as parent-subsidiary relationships were not considered.