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In recent years, with rising labor costs, insufficient land in Taiwan, and an enormous and rapidly growing market in China, the number of FDI that Taiwanese firms made in China has grown significantly. And the performance linkage between Taiwanese firms and their subsidiaries in Mainland China has become an important issue. Therefore, the aim of this study is to examine the effect of Taiwanese parent companies’ performance and characteristics on their return on foreign investment in China. Our empirical results show that the performance of parent companies would have significantly effect on its subsidiaries’ performance in China. Moreover, firms with profit repatriation have deeper impact on their subsidiaries’ performances. Finally, we also find that the longer firms have invested in China, the deeper the impact of the effect.

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