A Study On The Location Selection Of Chinese Enterprises' Foreign Direct Investment

It is known that there are more and more developing countries, including China, participate in cross-border investment, which used to be the developed countries'monopoly, for striving to make full of use of two kinds of resources and markets in order to reap more profits on the base of constant deepening of international labor division and speeding up process of the economic integration. As a developing country, China began its foreign direct-investment a relatively late, compared with developed countries. The State Council promulgated 15 items for the economic reform measures in the August, 1979, in which the first 13 ones clearly defined that it was legal to do business abroad. It also symbolized the cross-border investment of Chinese enterprises. Then there was a series policies for this kind of investment, for example, the Government raised a"going out"strategy for Chinese enterprises in 2000, China became World Trade Organization (WTO) member officially in 2001, the 16th Congress reported that it will"uphold the combination of'bringing in'and'going out'to raise the opening up level fully"in 2002, the 17th Congress declared that"support enterprises'international operations on research, production, and marketing areas, accelerate to develop multinational companies and international famous brands of China"in 2007, the Ministry of Commerce renewed the initiative on foreign direct-investment system and policy for widening the path of Chinese enterprises going out at the end of 2009. According to the Annual Statistical Bulletin of China's Foreign Direct Investment (2008) by the Ministry of Commerce, it was the first time for China's foreign direct investment to exceed $50 billion and net $55.91 billion, representing an increase of 111%. So the government, enterprises and many scholars focus this high rate of growth, especially the location selection of cross-investment. Choosing location properly could be directly related to the roles of production cost, comparative advantages, thereby the benefit and success of enterprises'foreign investment. Then this study analyzes the location choice for the cross-border investment of home enterprises on the foundation above.The first part elaborates the study's background and significance. It summed up the research issues of domestic and foreign scholars on the base of relevant theories and literature review for this subject, and briefly explains the creation and shortage of this study.The second part focuses the overview of the location selection of enterprises foreign direct investment in China, inkling the following three aspects. Firstly, it introduces its development process, dividing four stages. Secondly, it states the status quo of location selection in China by analyzing the foreign direct investment stock and flow respectively. As a result, we could know that the main investment areas are in Asia, Africa, and Latin America ones, especially in the developed countries and tax-off haves(避税地). Finally, it points out some problems for this study topic briefly.The third part analyzed the factors which could influence location selection of Chinese enterprises foreign direct investment on the host country, the investment country and the investment enterprise. The first one is the gravitational factor of the host country. There are different gravity degrees for the investment enterprises, according to the endowment, economy, polity, law, social culture of the host country. The second one is the motivating factor of the investment country. Some optimizations, such as the institutional building, policy orientation, and service system has become a strong backing for the"going out"enterprises strategy. The last factor is the investment enterprises. The location selection is determined by the strengths and weaknesses, strategic objectives, scale, and investment experience of the enterprises themselves. The last part for this study is to think about some tactful and political recommendations for this topic. For the tactful perspective, it mentions create strategies in accordance with the characteristics by investigating enterprise size. For some small and medium ones, it could be effective to invest in the ASEAN, the Asia-Pacific regions and some other developing countries, for their limited finance, lower technology, and less transnational investment. For the strength enterprises, it is necessary to consolidate and develop investment in developed countries. At present, so many European enterprises face the financial difficulties, blowing stock and rapid depreciation assets, due to the impact of the financial crises. Then the European and United States developed countries have to reduce the requirements of foreign investment, widen the restrictions on capital into the financial field, and attempt to rescue the market in order to ease the capital pressure. Although it benefits for the pace of"going out"in future undoubtedly, the investment behavior would be thought again and again on the basis of comprehensive consideration. So from the political perspective, this study emphasizes two things for our enterprises. One is the investment research, personnel cultivation and industry cluster effect. The other thing is the supplication and service from Chinese government.