The paper contributes to the subsidiary evolution literature by providing new evidence of location quality in emerging markets, as well as it opens the “black box” of industry effects on subsidiary evolution. The paper illustrates that industrial characteristics are likely to influence subsidiary evolution within newly established foreign invested R&D units in emerging markets. The findings of the paper further suggest that dynamics, at company and industry level, which nurtures codification of innovation related knowledge, make it easier for foreign invested R&D subsidiaries in distant emerging markets to develop capabilities - and gain charters.