These days China has become one of the world’s most important destinations for FDI.The majority of investments are concentrated in the coastal regions of mainland China.The investment inflows have mostly come from other East Asian economies like Hong Kong,Taiwan,Japan,Singapore and South Korea.The difference in the geographical distribution pattern of multi-national corporations (MNCs) in China is observed according to each economy.Taiwanese MNCs are especially characteristic of locating their sub-organizational units such as a set of factory,R&D department and branch office for the southern coastal provinces of Guang-dong and Fujian.In contrast,many MNCs from Japan and the South Korea are advancing to the Northeast coastal cities and regions such as Shanghai,Liaoning,Jiangsu and Shangdong.In the past paper the location factor of Taiwanese MNCs were explained as “the proximity between Taiwan and mainland”,“the differences in the degree of openness and of trade independence among China’s regions”and“the cultural tiers across the strait with using common language”.The aim of this paper is to examine the role of institution by Chinese local government on the location behavior of Taiwanese MNCs in mainland.We mainly focus on the electronic device and part industry originated from Taiwan in recent years.The Location factors mentioned as cheaper labor-cost and emerging huge market in China are true of the MNCs from all over the world.But a specific political factor affects the movement of Taiwanese corporations.The treatment of Taiwan as Chinese citizenship by Chinese local government urges them easily make inroads into the coastal areas.This specific factor brings merit to Taiwanese as follow.Firstly,the business organization authorized by Chinese local government is permitted only to Taiwanese Merchant.Many organizations of “ Taiwan Merchant Association (TMA) ” are located in all cities where they make inroads.These offices are organized not industrially but locally corresponding to the geographical dispersion of production chians.The biggest one is DongGuan TMA with the number of 3,450 corporations in the city.The main role of these associations is to collect specialized information in order to obtain an authorization from the province and city government to set up their subsidiaries in China.To share the information among Taiwanese beyond the barrier of industries makes it easy for them to enter mainland market.Secondly,the role of Taiwan Affairs Office (TAO) of the State Council,provinces and cities is indispensable for the entry of MNCs from Taiwan.These offices are supervised under not single but ten government functional departments corresponding to the activities of TMAs.The main function of TAO under the guidance of the Department of Economy is to coordinate and guide the economic work as for Taiwan.They manage and provide services,deal with economic disputes and provide related information for Taiwan investors.These sectors give TMA and Taiwanese businesspersons some advantages for entry with lower tax rates,fewer and simplified administrative and customs procedures,and duty-free import of components and supplies.TAO gives the priority for entry into China to Taiwanese businessperson if other country’s MNC shows the same contract condition as Taiwanese do.The availability of specialized information from local government side mainly attracts so many subsidiaries from Taiwan to specific industrial zone.There is no unicentric hierarchical spatial structure of Administration-Business organizations like Japan and South Korea in terms of the location of Taiwanese MNCs in China.China is a typical centralized country in the field of politics but the decision-making on the introduction of FDI is widely transferred to provincial government.