Study On Entry Mode Choice Of Chinese Enterprises' Outward Foreign Direct Investment

In recent years, China's OFDI has been experiencing a rapid growth period, and more and more enterprises are engaging their investment either through greenfield investment or cross-border mergers and acquisitions. Besides, the ownership structure involves wholly owned and joint venture which includes different equity share types. During this period, external uncertainties such as cultural differences between China and host country, governance quality and country risk of host country have had profound influence towards entry mode choice of OFDI. Meanwhile, characteristics composites of the strength, the ability of financing and R&D can affect the appropriate and rational choice decision for entry mode. In this context, some scholars started to focus on this topic, however, the research is limited due to the initial research stage. In view of this, in order to provide reliable theoretical basis and reference for decision-making, there is necessity to make systematic analysis of entry mode selection and carry out comprehensive summary of the mechanism of determinates.On the basis of domestic and foreign literature review, firstly, within the framework based on four motivations of OFDI, we analyzed the two stage of entry mode and the mechanism of different determinates. Then analysis of status quo of OFDI entry mode proves that cross-border M&As has substituted greenfield as the main entry mode. As to the entity of OFDI, state-owned enterprises are still taking up the most part. M&As mainly focus on traditional industry such as resource exploring, while greenfield investment mainly lie in manufacturing and business service industry. Besides, entry mode choice is obviously related with spatial distribution. Secondly, empirical analysis respectively study the single and two-stage model of entry mode choice. Binary logit. mulinomial logit as well as random coefficient logit are adoped to select the optimal model and compare the different determinates. The empirical outcome proves that two-stage model in which diversification choice is before ownership structure is the optimal strategy. Enterprises'advantage, motivation of seeking resources, technology and strategic assests should be given enough consideration. During the second stage, cultural distance, governance quality and country risk of host country should be emphasised.On the base of above empirical research, this paper finally summarized the mechanism through which different determinates have influence on the separate two-stage mode. In order to help OFDI enterprises make rational entry mode choice, some policy measures are proposed, which is to measure external uncertainty and control risk from macro-level and strengthen competitiveness edge of OFDI enterprises from micro-level.