Recent studies show that environmental regulations play a crucial role in the decision making of firm location. The methods in these empirical studies, however, are mainly quantitative models based on statistical data, and the way the environmental regulations work in the location decision are debatable. In this article, we analyze the relocation decision of the ceramic industry in Foshan City against the context of intensive environmental regulations through semi-structured interviews. The 'push-pull' model in the firm migration research is used to explore the way the environmental regulation works on to push firms from the old location and pulling them to the new sites. The conclusion is that the influences of the environmental regulation on the firm location decision cannot be ignored, and the effects of the environmental regulations depend on the social and economic conditions of the old and new sites. It is an interconnected process when the firms relocate from the old location to the new one that is heavily shaped by environmental regulations. The change of environmental regulation in the old place will not only affect the behaviors of the firms when relocated, but also the arrangement of environmental regulation in the new place. Besides the cost of pollution abatement, a possible interpretation of the effects of the environmental regulation upon the location decision is the behavior of the local governments and the firms. If the environmental regulation is lax, the pollution abatement cost is important for the firm to choose a new place, otherwise the sunk cost will be considered for risk prevention. It is confirmed that environmental regulation has become an important policy for local governments in China to promote the development of local industries under recent economic decentralization. Nevertheless, in this case study, the 'Pollution Havens' hypothesis is not yet confirmed
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