Research On The Location Choice For China To Make Direct Investment In Foreign Countries

As the rapid development of international productivity and the deepening of international division, foreign direct investment (FDI) outward has become one of the most important phenomenons of international economic activities nowadays. At the present time, not only has most developed countries made direct investment in foreign countries, but many developing countries have started to do this. China is no exception. Data imply that the growth rate of FDI outward from developing countries has exceeded that from developed countries recently.As a developing country, China is less economically powerful than developed countries. Where is the most favorable location for China's companies to make FDI outward? Developed countries, or developing countries? Asia, Australia, Europe, Africa or America? This involves the issue of location choice of China's FDI outward. This thesis tries to analyze this issue.Firstly, the thesis discusses some theories related to the location choice of FDI outward, including location theory and FDI theory. Secondly, the thesis introduces the situation of China's FDI outward and the situation of location distribution of it in the past and at present. Thirdly, the thesis gives a theoretical analysis framework, in view of both source countries and host countries. In the view of source countries, China is a developing country and the competitiveness of the companies there is generally weak. In the view of host countries, each host country has different conditions, including economic conditions, political conditions, social and natural conditions and so on. Therefore, companies of China must think over and over both the condition of their own and the condition of host countries before making FDI outward. Fourthly, the thesis analyzes the factors that affect China's location choice of FDI outward by using the method of econometrics, i.e. gravity model. From the analysis result we know that companies of china tend to make their FDI to the countries where GDP per capita is higher, and to the countries which is closer to China. Finally, on the basis of previous analyses, the thesis points out some unsuitable location strategies of FDI outward of China's companies, e.g. China's companies have made too much FDI to developed countries. Then the thesis gives some suggestions in order to solve these problems.