A Location Selection Study On Service Industry FDI Of China

In the 1980s, the focus of the Foreign Direct Investment (FDI) around the world has been put on service industry gradually, especially in the recent years, the flourished in service trade helped the industry FDI grow in a high-speed, and service industry FDI has become the new engine of the international investment. After the 1990s, the investment in services around the world has increased at the rate of 15% per year, and the important fact is that the FDI in service industry has occupied more than 50% of the whole FDI in the world. In 2001, China officially becomes the member of the WTO. The country fulfilled the implementation of WTO commitments, and gradually increased the degree of openness of the industries, also relaxed market access conditions, meanwhile, the focus of FDI in China gradually shift towards the service industry which has become the new field of FDI in the coming investment process. It is true that getting more and more FDI can improve the competitiveness, quality and the structure of the service industry, which it's extremely importance to the economic growth in China.The paper is written on the basis of FDI and Location Theory, we firstly analysis the general study of location selection by both domestic and foreign scholars, then select 5 elements: Gathering, Market, Fundamental structure, Human resources and Social environment, uses the Principal Component Analysis to define the main elements that impact the FDI in services, and also analysis the general traits of the provinces environment in service FDI.In order to analyses the FDI location selection elements we using the stepwise regression. The result shows that Gathering which is the most important factor has a positive correlation with FDI in services; however, Human resources has a positive correlation with FDI in services, Foreign Trade Reliance and the Consumption of Electricity factor has a negative correlation with FDI in services, which are out of our prospect. At the Part of comprehensive analysis have a detailed analysis on above issues.Finally, at the conclusion of the study, combined with the current situation of the service industry, from the perspective of balanced development eastern, central and western regions, we bring some suggestion in helping attract more FDI in service.