The Influence Of Institutional Distance On Chinese OFDI Location Choice

With the continuous development of world economy, economic globalization will continue to expand the21st century is an era of global competition, which is a fully open economy era, only adapt to world trend, choose economic integration and internationalization road,the countries of the world can not be eliminated by times, thus a foothold on the world economic stage. As one of the important global economies. China keep up the pace after the reform and opening up,facing international division of labor lead by investment, actively implement the strategy of "going out". intensify outward foreign direct investment, international investment enterprises,which trade with china are distributed in various countries and various areas throughout the world. The30years of reform and opening up, China’s foreign direct investment develops rapidly, especially in the past the first decade of the21st century, China’s foreign direct investment rose by nearly47times. With the in-depth reform of the market economy and Chinese government various preferential policies to encourage foreign direct investment, more and more enterprises choose to "go out", to extend scope of investment and trade abroad, however,"going out" will inevitably face to location selection problem, therefore, research of foreign direct investment location choice influence is a significant topic.The host country of foreign direct investment distribution is not balanced in our country,there must be a variety of reasons of this differences existed. Different countries have different institutions, the institution provides the arrangement about a country’s legal, economic, and social aspects, determines the transactions in the business activities, coordination cost and level of innovative activities. Different countries of the differences in the institutional environment has formed the institutional distances, which will not only increase the cost of transnational operation, may also increase the risk of transnational investment.Based on Scott’s classification method of the institutional distance, which is the regulative distance, normative distance and cognitive distance, respectively combined with national political risk index and the global governance indicators on the three distance has carried on the classification, respectively, set up a multiple entry index as explanatory variables, using2005-2010countries around the world in our country’s OFDI is flow as explained variable, by setting up multiple regression equation model, using the weighted least squares estimation method to carried on the regression equation, to further study of institutional distance for the influence of location selection of China’s OFDI. All the data before the regression analysis, this paper standardized, in order to get more accurate results. Then use Amos software for the classification of the index system of distance conducted a confirmatory factor analysis, in addition to a classification model under the control distance (distance) government stability factor of the load is not significant, the rest all measurable variables (the classification index) and potential (three big system distance indicators) load coefficient is significant. In ensuring that data is correct then on the basis of regression and classification, through the regression results show that system of our country and the host country of the greater the distance, the smaller the possibility of China’s outward foreign direct investment. Among various kinds of institutional factors, the legal system under the regulative distance on China’s OFDI and government stability there is significant negative correlation between location choice, and regulatory quality distance exists on the Chinese OFDI location choice is significantly positive correlation; Standard distance under the social economic conditions and there were significant positive correlation on the Chinese OFDI location choice, nationalism under cognitive distance and there were significant negative correlation between on the Chinese OFDI location choice. Through all the item indexes averaged distance indicators in three system, again through the regression analysis, found that all three institutional distance and OFDI flow is significantly negative correlation between. Therefore, on the basis of the above research results, this paper verifies the own hypothesis, namely, the greater the distance between home country and host country system, our country will avoid to invest in these countries. Aiming at this situation, this article put forward the corresponding policy Suggestions on the Chinese OFDI location choice at last.