An Empirical Study On The Location Selection Of Foreign Direct Investment In China's Retailing Industry

With the increase of foreign direct investment in China, the unbalance of FDI on the location is more severe. Many researchers start to study about the factors that influence the selection of FDI destination. They pay more attention on the research of country selection and city selection. However, few studies are done on the location selection for a specific industry.China has opened the retailing industry since 2004 according to the WTO rules. Till now, more than 80% of the largest retailers have entered China and competed with the local retailers. Most foreign retailers gather in the big cities of the east and begin to develop in the central and west China lately. Since the retailing industry has well established in the east, we can learn some lessons in developing in the west and central area by analyzing the experience of the FDI in retailing industry in east.By setting up a panel data model, this paper analyses the factors of location selection in the retailing industry, which has been opened to foreign investment since 2004. It's found that the income of residents and the number of retailers have strong positive affect on the location selection. Also, the development of the infrastructure can contribute a bit to the location selection. At the end of the paper, this paper makes some suggestion on how to attract more foreign direct investment in retailing industry. Rather than excessive open policies some local policy makers advocate, local government should find some effective ways to accelerate the development of retailing industry and then to advance the whole economy of the area. Besides, improving the infrastructure is also a necessary to attract foreign investment in retailing industry.