An Empirical Study On China's OFDI Location Selection From The Perspective Of Cultural Distance

Since the beginning of the 21 st century,with the continuous deepening of economic globalization and the strong support of the government's “going out” strategy,the scale and speed of China's outward foreign direct investment(OFDI)have achieved significant development,attracting much attention at home and abroad.Many scholars have conducted extensive discussions on the influencing factors of China's OFDI location selection.Among them,the research on the natural resource endowment and market size of the host country is particularly common and the conclusions are relatively consistent.However,there are relatively few studies on location selection of China's OFDI from the perspective of cultural distance,and the conclusions are inconsistent.As the economic environment at home and abroad is changing,it is of great importance to further explore the impact of cultural distance on the location choice of OFDI under the current situation,which is of profound significance for China to achieve more comprehensive and efficient development of OFDI and overall economic growth in the future.On the basis of reviewing the theory of international direct investment,this paper sorts out the domestic and foreign literatures on the interaction between cultural distance and foreign direct investment location,explaining the effect and mechanism of "outsider disadvantage" and "outsider benefit" of cultural distance.Then the author establishes a signal game model of enterprise OFDI location selection and proposes hypotheses.Referring to the investment gravity model,this paper used the OFDI stock as the explained variable,cultural distance as the explanatory variable and introduced 10 control variables.The panel data of OFDI stock of 52 host countries in the world from 2003 to 2016 were used for full sample and sub-sample test,robustness test,and further discussion on the introduction of cross terms.The regression results were reported and analyzed in detail.The main conclusions of this paper can be summarized into three points.First,from the results of the test with whole sample,we can find that cultural distance obviously inhibits the choice of China's OFDI location generally,but the influence of cultural distances in different dimensions is different.Second,the restrictive effect of cultural distance on China's OFDI location selection will vary due to the degree of economic development of the host country,whether it is a country along the Belt and Road,or an Asian country.Third,the development of China's economy and bilateral trade can positively adjust the negative effects of cultural distance on China's OFDI location selection.Therefore,this paper finally put forward the following Suggestions: seeking different ways to narrow cultural differences and reduce cultural friction;making different investment strategy according to location difference;promoting the development of China's economy and strengthening bilateral trade.