GEOGRAPHICAL RESEARCH ›› 2020, Vol. 39 ›› Issue (10): 2295-2312.doi: 10.11821/dlyj020200113

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The spatial pattern and underlying factors of exited automobile ventures in China

XU Ning(), LI Xiande(), LI Weijiang   

  1. School of Environmental and Geographical Sciences, Shanghai Normal University, Shanghai 200234, China
  • Received:2020-02-14 Revised:2020-06-14 Online:2020-10-20 Published:2020-12-20
  • Contact: LI Xiande E-mail:xuning2590@163.com;lixiande2007@163.com

Abstract:

The global automobile industry has been going through unprecedented and once-a-century changes, which in turn has stimulated new waves of entrepreneurship within the sector. A notable feature of the Chinese automobile industry in recent years is the emergence of new ventures. However, with the decline of automobile sales, many new ventures have exited the market, which generated negative impacts on regional economies. This study uses a detailed firm-level dataset from the "The National Enterprise Credit Information Publicity System" to analyze the spatial pattern of automobile ventures. In particular, it identifies hotspots of new automobile ventures that have ceased to operate with kernel density analysis. Drawing upon the database of "China's Annual Survey of Industrial Firms", this study employs logit regressions to identify underlying factors of exited automobile ventures in China. Specifically, this study finds that: (1) Dynamic entries and exits have been taking place. Areas with more new automobile ventures such as the Yangtze River Delta tend to have more exited firms; exited firms along the coast as well as the Yangtze River tend to be larger. (2) Firms' survival rate varies across regions. "Hotspots" of exited firms include Fuzhou, Yichun, and Ji'an in Jiangxi Province, Yantai in Shandong province, as well as Chizhou and Tongling in Anhui Province. (3) Related variety, which contributes to the generation and diffusion of new "know-how", tends to lower the probability of firm exit, while unrelated variety tends to have the opposite effect. Furthermore, higher levels of relatedness within the sector and larger sizes of the complete automobile industry tend to reduce the probability of firm exit. Higher levels of globalization, which have the potential to bring in new "know-how", tend to be associated with lower probabilities of firm exit. It is also noted that higher levels of dependence on state-owned enterprises as well as lower levels of tax tend to lower the probability of firm exit. Therefore, these results provide further evidence on the importance of industrial policies on firms' survival.

Key words: new automobile venture, spatial pattern, exit, influencing factor, China