In this thesis, using Taiwanese companies investing in China as the sample, the impact of localisation and R&D intensity on the firm performance of MNE subsidiaries investing in an emerging market are examined. There has been limited previous research for this important topic. In order to strengthen the statistical results, the thesis includes two major models to compare: OLS regression model and binomial logit model. In the empirical part, five explanatory variables: local employment ratio (local worker linkage), local content ratio (local supplier linkage), local capital ratio (local financial linkage), local sales ratio (local sales linkage), and firm’s age will be employed to measure the scope and extent of localisation. The strategic goal and operation type of local-market-seeking FDI are significantly different from that of export-oriented FDI. Thus, I categorise Taiwanese manufacturing industries investing in China into two groups: the local-market-seeking group and the exportoriented group. It is noteworthy that for these two groups, each localisation variable and R&D intensity exert a different impact on subsidiary performance. Besides, the aggregate influence of these five localisation variables on the subsidiary-level performance of local-market-seeking group is larger than that on the subsidiary-level performance of export-oriented group. Therefore, it is suggested that local-market-seeking FDI is more affected by host country local business environment than is export-oriented FDI.