A Study On The Impact Of Cultural Differences On China ’s Foreign Direct Investment

Since the 1990 s,the continuous deepening of economic globalization and marketizationon the one hand foreign direct investment has brought giant development space and the unprecedented opportunity to Chinese enterprises,on the other hand,as also as the huge challenge.Since 2000 China put forward the development strategy of "going out" foreign direct investment has made rapid development.However,due to the late start for China’s foreign direct investment,it also met various problems in developing because of cultural differences and made many Chinese companies loss in foreign direct investment.Although there are many scholars study on direct investment but there are very few people focusing on cultural factors which influence China’s direct investment to OECD countries With help of drawing lessons from existing research,this article embarks from the perspective of cultural differences,to give a further analysis from theoretical and empirical analysis.Based on the current situation of direct investment of the OECD countries and mechanism analysis,this paper found that China’s foreign direct investment tend to close geographic distance,smaller cultural differences countries.In the early stage.Chinese companies began at the investment way with seeking low-cost resources,and focus on close relationship,close geographic distance of national smaller cultural differences.The lower the transaction cost is caused by cultural differences and similar countries in developing countries,low labor costs and transaction costs will affect the economic benefits of enterprises,thus finally affecting business investment activities.In order to further analyze the cultural differences influence on cross-border investment in China,this article selects the panel data of 34 countries to which China give foreign direct investment in OECD countries of year 2007-2015 using an investment gravity model empirical analysis on cultural factors that affect China’s cross-border direct investment,and found that there are significant positive correlation between the cultural differences and Chinese direct investment to the OECD countries the greater the cultural differences,the greater China’s direct investment in the country,besides China’s direct investment to OECD countries is negative correlation relationship with bilateral exchange rate,while geographical distance,the host country market size labor cost and bilateral trade and other variables are positive related.Finally according to the results of the analysis,in order to better promote theforeign direct investment of enterprises.This paper gives relevant policy Suggestions.