Study On Location Selection Of FDI In China

International Direct Investment and Multi-National Companies (MNCs) play amajor role in the economic globalization. International Direct Investment is becomingthe main stream of international economic corporation replacing of international trade.Foreign Direct Investment (FDI) has been developing in a high speed in China sinceChina's opening to the world. In 2002, China became the number one on FDI inflowin the world. In FDI inward stock, China is the number two behind U.S.A. FDI inChina appears obviously regional lopsided: eastern region occupies 88.56%, centralregion occupies 7.74%, and west region occupies 3.7% in the actual use of FDI from1986 to 2004. Even in the eastern region, FDI is centralizing to the big cities in theJingJinTang District and Yangtse River Delta and ZhuJiang River Delta. The trend tocentralize to above areas is becoming more and more obviously.This article studies the location selection of FDI in China with demonstration andtheories, qualitative and quantitative analysis, comparative and systemic analysis.The first, reviewing the theories which contain location theory, InternationalDirect Investment Theory, International Trade theory and the study about FDIselection in China. It will establish the academic base for the bellowed.The second, studying the actuality of FDI location in China and revealing thelopsided state that mainly in the east area and little in the rest areas.The third, discussing the subjective and objective factors that decide the locationselection. As to MNCs, the subjective factors include market, cost, geographicalposition, resource and cluster. The new trend of factors is also considered. As to thearea, the factors that bring the lopsided state are paid more attention. The industrycluster plays important effect in the location decision process, besides the openingpolicy and geographical position and the economic scale.At last, presenting some suggestion to absorb more FDI for the central and westregion.The innovation of this article is followed: analyzing qualitatively the factors ofthe lopsided location; studying the industry clusters quantitatively. Developing theindustry clusters is presented for central and west region to strengthen the advantageof location and absorb more FDI.