A Study On The Impact Of Host Country's Institutional Risk On China's OFDI Location Selection

Since 2008,the developed country's sovereign debt crisis,the world economic recovery is slow,the grim international economic situation brought adverse effect to the international direct investment,which is both opportunity and challenge for Chinese enterprises.In this background,China's enterprises around the world for the allocation of resources,accelerated the pace of go out,the rapid growth of the foreign direct investment has become an important engine to promote the development of the global economy.In 2015,China proposed the "One Belt And One Road" strategy,which opened a new stage of China's opening up to the outside world,which strengthened the internal impetus for enterprises to go out.In 2015,the amount of foreign direct investment reached us $145.67 billion,while the actual amount of foreign investment in the same period was us $126.267 billion,which exceeded the latter of us $19.403 million,and China officially entered the ranks of net capital exporter.Foreign direct investment has greatly driven the growth of China's economy.Before the 2008 financial crisis,Chinese enterprises' overseas investment was mainly distributed in developing countries.After the financial crisis,on the one hand,the developed countries have adjusted their economic structure and provided opportunities for the entry of Chinese enterprises.On the other hand,the rapid development of China's foreign investment has entered the stage of growth and development from the initial stage of development.Investment is increasing rapidly.In recent years,this trend is more pronounced.Institutional risk seriously affects the success or failure of Chinese enterprises' foreign direct investment.Reasonable and effective avoidance of system risk can reduce transaction costs and improve the overseas competitiveness of Chinese enterprises.Under the new situation,the connotation of the institutional risk of the host country has also changed,so the relationship between the two is to guide the overseas investment of Chinese enterprises during the 13 th Five-Year period.Of the development of important practical significance,while enriching the emerging economies of multinational companies related to foreign investment theory.Many scholars have conducted empirical research on the relationship between the institutional risk of the host country and the location choice of the foreign direct investment,but the result is controversial and divergent.This paper argues that apart from the differences in the selection of the sample,the existing research does not distinguish the Chinese enterprises from the investment of developed and developing countries is also an important reason for the differences in the conclusions.Chinese enterprises and developed countries,different from the multinational corporations,which has a monopoly advantage,the main feature of foreign direct investment is the use of assets.The former has only a partial competitive advantage,there are two types of investment: the reverse investment in developed countries and the forward investment in developing countries.The main features of foreign direct investment are intertwined with asset seeking and asset utilization.Therefore,we can't simply study the overseas investment location of multinational enterprises in developed countries to study the overseas investment of Chinese enterprises.Only by distinguishing the two can we clearly reveal the relationship between the host system risk and the choice of China's foreign investment location.This paper first analyzes the features of the locational distribution of Chinese foreign direct investment,then from the theoretical analysis of the economic system risk,the risk of political system and legal system to the enterprise the influence of foreign direct investment location choice mechanism.Once again,this paper selects the panel data of China's direct investment in 45 host countries from 2003 to 2014,and compares the two samples by means of investment and reverse investment.Study found that regardless of the consequent investment or reverse,Chinese enterprises prefer low economic system risk and low risk of legal system of the country,but the results of the investigation about the political risk is inconsistent,in consequent investment,Chinese enterprises significantly low preference corruption control and low efficiency of the government of country;In reverse investment,China's corporate preference is not obvious.For the market and natural resources of the host country,Chinese enterprises have a significant preference for both the direction and the reverse,and the distance of geographical distance has obvious reaction to the investment.Finally,the corresponding policy Suggestions are put forward.