Study On Early-warning System Of Chinese OFDI Country Risk Based On BP Neural Network

With the rapid development of economic globalization, overseas investment hasbecome one of the important ways of the world economic and technologicalcooperation of countries around the world, the circulation of goods, capital andinformation technology between countries and regions can effectively promote theoptimal allocation of resources on a global scale, and promote the development of thecontinuous development of the world economy. Although China’s overseas directinvestment started relatively late, the momentum of it rapid development, especiallydrived by the rapid rise of the economy and the strategy of "going out", a largenumber of Chinese enterprises increased overseas investment. However, in theprocess of China’s enterprises wantonly into the overseas market and participate ininternational investment, influenced by the unstabilzing factors of internationaleconomic and political environment, overseas investment losses have occurred. A lotof factors influencing these enterprises overseas direct investment loss, one of theimportant causes of the results is the low level of risk management, especially manyenterprises have not yet established the national risk warning system. Therefore, thecountry risk early-warning problem of outward foreign direct investment has becomethe focus of society.Country risk is a variable that is the most difficult for investors to monitor in theprocess of overseas foreign direct investment activities, how to effectively carry outthe early-warning of country risk concerns the basic goal the investors want toachieve in overseas foreign direct investment.Because Chinese overseas foreign directinvestment started relatively late, and affected by different countries’ history,socio-economic, institutional and other factors,the research of country riskearly-warning in Chinese OFDI is still in the exploratory stage. To solve this problem,we should be based on relevant theoretical analysis on country risk early-warning ofOFDI, build a reasonable and effective index system what about country riskearly-warning of Chinese OFDI, and establish a scientific country risk warningmodel.Therefore,this study on the base of comprehensive analysising and referencingrelevant theories about OFDI country risk from the existing domestic and foreignscholars,the research analyzed country risk factors of OFDI at first, and then constructed country risk early-warning index system of OFDI according to certainselection principle, lastly,established a country risk early-warning model of ourcountry’s OFDI by useing BP Neural Networkk method combine with principalcomponent analysis method, and used the annual data on the indicators system from2004to2011,we have collected10host flow countries of China’s overseas directinvestment, to simulate an application about the country risk early-warning model.