The Location Choice Of China Enterprises' Foreign Direct Investment

Based on other scholars' research, in this paper, the author analyses the factors determining the location choice of China enterprises' foreign direct investment (FDI). Using a panel data covering seventeen sample countries (region) from 1995 to 2003, with a Linear Regression method, the author finds that the location choice decision was affected by the advantages of the host country, including the opening degree of the host country's economy, country type, the trade scale between the host country and China, and the similar culture background. The above four factors had a positive effect on the location choice of China enterprises' FDI. Opposite to the theoretic anticipation, the infrastructure development level had a negative effect on the location choice of China enterprises' FDI, the author makes an explanation about this case. Other factors including the labor cost and the market scale also affected the location choice of China enterprises' FDI, but not statistically significant.Following the above Regression Analyses, the author uses a Factor Analyses method for the purpose of evaluating the investment environment of the sample countries and studying its inner structure as a deeper research. The Factor Analyses result suggests that, the investment environment of each country was stable and the gap between these countries was not widened. The countries with higher economic development level had a better investment environment. By studying the inner structure of the investment environment, the author finds that when China enterprises make an investment overseas, different main factors were taken into account according to different host country.