Industrial selection obeys the general law of international industrial transfer, from labor-intensive industries to knowledge-intensive industries. Location choice is mainly influenced by its globalization strategy, especially the strategic positioning of overseas subsidiaries, and the hard environment, soft environment and intellectual property protection factors of the host country are also the main factors affecting location choice.

According to a survey of foreign trade policies in more than 40 countries organized by the United Nations Conference on Trade and Development, these countries have issued more than 1000 foreign trade policies, of which more than 95% are conducive to promoting foreign trade. This allows multinational companies to freely search for ideal investment industries and locations on a global scale. They surround the manufacturing value chain and integrate and optimize the allocation of resources around the world.

The location choice and industry choice of multinational companies have shown an obvious feature and dynamic in the past 10 years, that is, clustering or agglomeration, the emergence of global value chain phenomenon.

Since the optimal allocation must choose regions that are suitable for certain value creation links, a new trend has been formed-in regions with better comprehensive conditions in all aspects, the more foreign investment will be attracted in quantity and scale, so the phenomenon of global value chain will appear. At present, the industrial chain of multinational corporations is not only in one country, but on a global scale, which is a phenomenon of industrial clusters formed by agglomeration in large and discrete areas.

What are the benefits of industrial clusters that make multinational corporations so favor such an investment approach? The main reasons are as follows. One is conducive to the depth of division of labor. Industrial clusters are characterized by one or two industries as the leading, so many industrial clusters are easy to form an industrial brand. Moreover, the enterprises in this industrial cluster are all focused on their core, distinctive and competitive value links-because each enterprise is only engaged in a certain part that it is good at, it is easy to make the industry bigger and better. Second, industrial clusters are conducive to resource sharing and group synergy, access to external economic and low-cost advantages. This is manifested in the reduction of production costs, such as the sharing of common goods and factor resources by firms in a cluster. Third, industrial clusters promote the accumulation of knowledge and technology, and develop into innovative advantages based on comparative advantages of resources. Fourth, the external economic and economies of scale benefits of industrial clusters are conducive to attracting various foreign factors of production into the industry and allocating resources on a global scale. Fifth, it is conducive to multinational companies to form regional brands, open up foreign markets and enter the world.

Which regions are easy to be favored by multinational companies? The location choice of multinational companies is mainly affected by their globalization strategy, especially the strategic positioning of overseas subsidiaries. Multinational companies have many departments: R & D, regional headquarters, marketing and logistics management. Different functional departments have different purposes and requirements when making location choices. For example, the market pursuit type, such as European and American multinational companies when they first started to invest abroad, is different from Japanese and Korean companies. Japanese and Korean companies regard developing countries as processing and assembly bases, which is destined to focus on the labor costs of developing countries, especially preferential policies. For market-pursuing companies like Europe and the United States, they may pay more attention to market potential, consumption levels, and rich resources in the host country.

Multinational companies invest in host countries and attach great importance to the investment environment of host countries. The host country's hard environment, soft environment and intellectual property protection factors are the main factors that affect the location choice of multinational companies. Production factor endowments, trade barriers, etc. are also factors they refer.

Multinational companies invest in the host country and attach great importance to the investment environment and location advantages of the host country. Their location choice is divided into three elements: one is the hard environment. The so-called hard environment is the location infrastructure, service facilities and cultural background, and the traffic environment as the location information hardware is also very important. There is also a soft environment. The so-called soft environment refers to the host country laws and regulations, policies and administrative aspects. Another is the protection of intellectual property rights. Why do multinational companies attach great importance to the latter two issues? The reason is very simple, multinational companies choose a place to invest, not only transfer the past production equipment, but also the service industry and R & D center. The value created by the service industry and R & D centers is intangible, so it needs to rely on intellectual property rights and legal protection.

Of course, the impact of location advantage is not static. Resource orientation will make European and American companies more willing to approach the raw material market. For example, petrochemical companies are more willing to approach oil-producing countries, which will help them reduce raw material costs. As the industrial content and strategy of the transfer of TNCs to developing countries change, the degree of emphasis on their location environment is also different. Some factors are rising and others are falling. But on the whole, market factors are still very important. Many multinational companies invest in developing countries because of their huge market potential.

With the upgrading of industrial structure, the R & D institutions of multinational companies have gradually transferred to developing countries, and their knowledge resources and strategic assets have replaced the natural resources in the past and become an important factor in the location selection of many multinational companies.

The location of multinational companies in China is mainly in the Yangtze River Delta and the Pearl River Delta; the focus of industrial selection is the secondary industry, and investment is mainly concentrated at both ends of the value chain; the processing and assembly parts with smaller profit margins are outsourced by them.

The location distribution of multinational companies in China is mainly in the Yangtze River Delta and the Pearl River Delta. Now, this situation is also gradually changing, mainly reflected in two aspects: first, due to the strong attraction of the east, multinational companies continue to increase investment in the eastern coastal areas, but also began to invest in the central region. Why are multinational companies shifting from the Yangtze River Delta and the Pearl River Delta to the central region? Because compared with the Yangtze River Delta and the Pearl River Delta, the central region helps multinational companies shift from labor-intensive to technology-intensive in terms of talent and culture.

Multinational companies investing in China cannot follow their inclinations, cannot be completely market-oriented, but must act in accordance with market rules with Chinese characteristics. Therefore, the strategy of multinational companies in China is first to obey the general law of international industrial transfer in industrial selection. For example, the transfer of chemical industry must conform to the law of chemical cycle. At the industrial level, first labor-intensive industries, and then knowledge-intensive industries. The region is dominated by cities with a certain industrial development base, which is gradually expanded to the whole country.

Multinational companies in China's industrial choice, the first industry project is relatively low, only about 2%. Their focus was on the secondary sector, with 73.6 per cent of projects and 67.4 per cent of contract projects. Except for 2006, the number of secondary industry projects remained at a high level of more than 70% in the rest of the year. Multinational corporations' investment in China's tertiary industry presents an unstable periodicity.

Multinational companies' investment in China is mainly concentrated at both ends of the value chain, and the processing and assembly parts with smaller profit margins are outsourced by them.