Modal Options For Chinese Enterprises’ Direct Investment In South Asian Countries

In order to follow the trend of world economic integration,Chinese companies need to strengthen their outbound direct investment in other countries and regions.South Asia is a region that deserves great attention,and it has great investment potential.In practice,in the future of economic globalization,the markets of South Asian countries will certainly have closer ties with China’s market,so it is significant to improve China’s investment pattern in South Asian countries as soon as possible,and the study on the choice of OFDI mode for South Asia is one of the important issues facing Chinese enterprises;academically,many scholars have conducted studies on what OFDI mode Chinese enterprises should choose.In the academic field,many scholars have researched on which OFDI mode Chinese enterprises should choose,and many scholars have focused their perspectives on all countries along the Belt and Road,but there are fewer studies on the choice of direct investment mode for Chinese enterprises to enter South Asian countries.Therefore,there is a practical and academic need to study the choice of Chinese enterprises’ OFDI in South Asian countries.The main content of this paper revolves around the theoretical analysis and empirical testing of whether firms should choose greenfield or cross-border M&A investment approaches when making direct investments in South Asian countries.The data used in this paper for country-level information are mainly from the World Bank database,and the data used in the investment enterprise research sample are mainly from the Guotaian database.The sample time span is from 2010 to 2020(inclusive).Logit models are used to empirically study the impact of micro and macro factors and their cross-talk on investment patterns.After theoretical analysis and empirical tests,the following conclusions were obtained:when making OFDI decisions,enterprises with high productivity are more likely to choose the cross-border M&A approach to enter the South Asian market;the likelihood of enterprises choosing the cross-border M&A approach increases with the increase of technology and R&D.resources in South Asian countries;Chinese enterprises are more likely to use the cross-border M&A approach to enter South Asian countries with better institutional quality;Chinese enterprises are more likely to use the cross-border M&A approach to enter South Asian countries with better institutional quality The likelihood of Chinese firms to choose cross-border M&A increases with the increase of technology and R&D resources in South Asian countries;Chinese firms are more likely to choose cross-border M&A to enter South Asian countries with better institutional quality;Chinese firms are more likely to choose greenfield investment to enter South Asian countries with less institutional differences from China;firms with higher productivity are more likely to choose greenfield investment to enter South Asian countries with better institutional quality;firms with higher profitability are more likely to choose cross-border M&A to enter South Asian countries with better institutional quality.