Research On Location Selection Of Chinese Foreign Direct Investment

During the recent decade, China’s foreign direct investment is increasing dramatically,which makes China one of the biggest capital outflow developing countries. Foreigndirect investment has become the most important measure to participate into theinternational division of labor and to enhance the national comprehensive competitionability, which is the key to obtain the ability of global control. However, there aresome problems in the location selection when our enterprises conduct foreigninvestment, which makes the research on the reasonable location selection of foreigndirect investment become an urgent lesson. The foreign direct investment of ourcountry is highly concentrated on a few countries and regions, especially tax havenslike Hong Kong, Cayman Islands and British Virgin Islands. This fact will be theobstacle for our country’s health development on the foreign direct investment. Underthis circumstance, conducting researches on the location and industry selection offoreign direct investment will boost the health development of our country’s FDI.This dissertation first raises the meaning of FDI and then summarizes the researchesachievements of previous scholars from home and abroad. Based on these work, thisdissertation summarizes the related theories on FDI location selection andcomprehensively analyzed the status quo, features and problems of FDI in our country.This article aims to analyze the FDI location selection of China through theeconometrics model by using the FDI stock panel data from China to23representative countries. The explaining variables are categorized into four types ofdriven force of FDI: resource-oriented, efficiency-oriented, market-oriented andtechnology-oriented, and adopt eight indices like GDP, average salary, and number ofpatents. The result shows that China’s location selection of FDI put its priorities onthe driven forces of market and efficiency. Meanwhile, the consideration of resourcesand technology is insufficient, which contradicts with the common knowledge on thisarea.Based on the analysis result, this dissertation suggests several advices on the locationand industry selection of FDI: when Chinese enterprises conduct FDI, there are several factors need to be considered, including market scale, market potential,infrastructure, labor cost, technology, and resource endowment, etc; In present, Chinashould focus more on the investment to developing countries, especially ASEAN,Africa and middle-Asia countries; meanwhile, China should invest on the developedcountries selectively. In sum, China’s FDI location selection should change theover-concentrated status quo, and diversify the location and market selection. As tothe industry selection, China should seize the circle of industry development andtransfer the marginal industries or industries with comparative advantages.