A Study On The Influencing Factors Of China’s Manufacturing Outward Direct Investment

In recent years,China’s economy has developed rapidly.According to the Statistical Bulletin of China’s Foreign Direct Investment,both the flow and stock of China’s foreign direct investment(OFDI)show an overall rising trend,among which the OFDI scale of the manufacturing industry to various countries and regions keeps expanding,especially the 10 ASEAN countries.Since 2018,it has become the main export country and region of China’s manufacturing industry.In addition,the Regional Comprehensive Economic Partnership(RCEP)came into effect on January1,2022.This means that a large integrated market will be formed in the world consisting of China,10 ASEAN countries,Japan,the Republic of Korea,Australia and New Zealand,accounting for about 30% of the global economy.Therefore,the external environment faced by China’s manufacturing OFDI is increasingly complex,and there are numerous factors affecting China’s manufacturing OFDI.Whether the multidimensional distance between the two countries is the key influencing factor for China’s manufacturing OFDI to RCEP member countries is the question to be studied in this paper.This study has important theoretical and practical significance.On the one hand,it tests whether the multidimensional distance between bilateral countries is the key influencing factor of OFDI of China’s manufacturing industry and analyzes the influencing mechanism.On the other hand,it also provides reference for the investment between China’s manufacturing industry and RCEP member countries.Most domestic and foreign scholars have studied the influence of multidimensional distance on China’s OFDI and China’s influence on OFDI of countries along the "Belt and Road",while there are few studies on the OFDI of China’s manufacturing industry to RCEP member countries.Firstly,this paper systematically introduces the concepts of RCEP member states,OFDI of manufacturing industry and multidimensional distance,divides the research scope and objects of this paper,and then describes the relevant theories of OFDI and multidimensional distance,which are based on the outsider disadvantage theory,the eclectic theory of international production,the transaction cost theory and the demand similarity theory.To provide theoretical basis for OFDI of Chinese manufacturing industry;Secondly,this paper studies the current situation of OFDI in China’s manufacturing industry during 2012-2021 from three aspects: investment scale,investment location and investment mode.Then,this paper discusses the factors that affect OFDI of China’s manufacturing industry,analyzes the influencing mechanism,and puts forward three hypotheses.Finally,this paper takes the institutional distance,cultural distance and economic distance of bilateral countries as the entry point,and conducts an empirical study based on the OFDI data of China’s manufacturing industry on 10 RCEP member countries from 2012 to 2021 as the sample,and analyzes in detail the influence of multidimensional distance between bilateral countries on China’s manufacturing industry’s OFDI of RCEP member countries.The research results show that: Institutional distance has a significant inhibition effect on the OFDI of Chinese manufacturing industry to RCEP member countries,mainly because the greater the institutional distance,Chinese manufacturing enterprises are prone to fall into the "outsider disadvantage" in the OFDI,and the greater the possibility of investment failure.Cultural distance has a significant inhibitory effect on China’s manufacturing industry to OFDI of RCEP member states,because the greater the cultural distance,the greater the transaction cost of Chinese manufacturing enterprises due to information asymmetry,and the greater the loss they face.Economic distance has a significant inhibitory effect on China’s manufacturing industry to OFDI of RCEP member countries.The reason is that the greater the economic distance,the greater the difference in consumption level and consumption preference between the two countries,which is not conducive to the rapid occupation of foreign markets by China’s manufacturing industry.Therefore,this paper puts forward relevant suggestions for China’s OFDI manufacturing industry from two aspects: on the one hand,it holds that the country should pay attention to the influence of multidimensional distance,spread Chinese culture in overseas markets,learn the technical level of advanced countries,pay attention to the friendly exchanges between the leaders of the two countries,and establish a risk early warning mechanism to ensure the security of enterprise investment.On the other hand,while increasing the investment activities between the manufacturing enterprises and the member countries with small multi-dimensional distance from China,they should attach importance to the asset evaluation and review of the target member countries and enterprises,so as to avoid falling into the "outsider disadvantage".In addition,enterprises should also pay attention to the training of international talents,so as to promote the overall level of enterprises.