Study On Location Choice Of China’s Outward Direct Investment In Northeast Asia

Since the 16th National Congress of the Communist Party of China put forward the strategy of "going out", Northeast Asian countries, which have the characteristics of close geographical distance to China and complementary resources, have attracted more and more Chinese enterprises" outward direct investment. The implementation of investment agreement among Japan, South Korea and China in 2014 and the signing of China-Korea free trade agreement, greatly improve the investment environment in relevant countries, and make China’s further more outward direct investment to Northeast Asia possible. In the face of China’s increasing outward direct investment in Northeast Asia, the location choice is an unavoidable issue for Chinese enterprises to invest directly to this region. Therefore, it has important theoretical and practical significance to study the location choice of China’s outward direct investment in Northeast Asia.This paper is divided into 5 parts. The first chapter is the introduction. It describes the research background and significance, and summarizes the current research on three aspects of the international direct investment location theory, the study of China’s outward direct investment location choice and China’s outward direct investment location choice in Northeast Asia. Then introduces the content, method of this paper, as well as the innovation and shortage.The second chapter is the status of China’s outward direct investment in Northeast Asia. Mainly from the view of the location, it analyzes the scale data, country distribution data and industry distribution data of China’s outward direct investment in Northeast Asia from year 2003 to 2013. Then found that, on the scale of investment, China’s outward direct investment in Northeast Asia has developed rapidly in recent years, but compared with the size of China’s outward direct investment, China’s outward direct investment in Northeast Asia is small, the share is low, and there is still a large space for improvement, on the country distribution of investment, Russia is the largest country absorbing China’s outward direct investment in this region, and nearly half of China’s outward direct investment in Northeast Asia has flowed into this country. Then is Mongolia, China’s outward direct investment in Mongolia has a high share of China’s outward direct investment in this region in recent years. In contrast, Japan and South Korea’s share is less; China’s outward direct investment in North Korea is very limited. Moreover, China’s outward direct investment in Northeast Asia mainly flows into the transition country and developing country (Russia and Mongolia), while the developed countries (Japan and South Korea) in attracting China’s outward direct investment does not have the location advantages. On the industry distribution of investment, China’s outward direct investment in Japan is focused on the non-manufacturing industry, such as financial insurance, information, wholesale and service and so on. China’s outward direct investment in South Korea is focused on electronic machinery, real estate leasing, commercial services, chemical, wholesale and retail, etc. China’s outward direct investment in Russia is concentrated in the manufacturing, agriculture, forestry, animal husbandry and fishery, leasing and commercial services and mining. China’s outward direct investment is focused on the mining industry in Mongolia. China’s outward direct investment in North Korea is concentrated in the manufacturing and mining industries. On the whole, no matter the direct investment scale or the industry distribution of direct investment, it is obvious unbalanced in China’s outward direct investment to Northeast Asia.The third chapter is the analysis of the location factors of China’s outward direct investment in Northeast Asia. On the basis of the previous research and the actual investment environment of this region, it describes the influence mechanism of the factors on location choice of outward direct investment from four aspects of economy, politics, resources and society. Specially, on the economic factors, it mainly observes the influence of host country’s economic development, foreign trade, financial development, labor costs and technological level. On the politics factors, it mainly analyzes the influence of host country’s political stability and institutional environment. On the resources factors, it mainly studies the influence of host country’s natural resource endowment. On the social factors, it mainly analyzes the culture of host country. On the basis of these, combining with the relevant situation of Northeast Asian countries, studies the possible investment location choices of China’s outward direct investment in Northeast Asia.The fourth chapter is the empirical analysis of the location choice of China’s outward direct investment in Northeast Asia. Bases on the above analysis of the regional factors, and selects the 9 variables, empirically analyzes the location choice of China’s outward direct investment in Northeast Asia with the unbalanced panel data from year 1992 to 2011. The result shows that, host country’s economic development, bilateral trade ties, labor costs, technology level, the freedom of foreign investment and cultural factor have significant effect on China’s outward direct investment in Northeast Asia. Among them, the host country’s economic development, bilateral trade ties and cultural factor have positive correlation relationship with Chinese enterprises" outward direct investment in Northeast Asia., and among them the effect coefficient of host country’s economic development is the largest. The host country’s labor costs, technology level and the freedom of foreign investment have remarkable negative effect on China’s outward direct investment in this region, but the effect of the host country’s financial development, resource endowment and institutional environment are not significant. The outward direct investment of Chinese enterprises in Northeast Asia belongs to the market-seeking and efficiency-seeking. The location choices of the former can be Japan, South Korea and Russia, and location choices of the latter can be Mongolia and North Korea.The fifth chapter is conclusion and recommendation. On the basis of summarizing the conclusion of this paper, this chapter mainly puts forward suggestions for optimizing the location choice of China’s outward direct investment in Northeast Asia from the two aspects of enterprise and government. On the enterprise level, mainly including those Chinese enterprises should make clear the rational location choice and industry choice in Northeast Asia, and improve their technological strength to ensure the successful implementation of China’s strategic asset-seeking investment to Northeast Asian countries. On the government level, the Chinese government should actively use the bilateral trade behaviors between China and Northeast Asian countries to guide the development of export-oriented outward direct investment, and encourage efficiency-seeking enterprises’ outward direct investment to the Northeast Asian countries to promote the transfer of China’s related industries, and improve information channels to provide reference for Chinese enterprises’investment location decision.