The Influence Factors Of South Korean Fdi In China Is Analyzed

Since the policy of reform end opening-up was introduced, China’s economy has experienced a rapid growth. The improvement of China’s investment environment and its huge domestic market have made it one of the first destinations of many foreign investments. Especially, since China was accepted as a member of the WTO, China, a country with an enormous domestic market and great development potential, has absorbed a large amount of Foreign Direct Investment.Compared with all the other foreign countries which have poured investment into China, Korea has a rather late establishment of diplomatic relations with China (1992). However, the economic relations between China and Korea have developed at an astonishing speed. Up until now. China has become one of Korea’s most important investment destinations. This article analyzes the reasons, characteristics and a review of the history of the investment.Based on the theories of FDI and results of the existed research, this paper concludes those factor into four categories:market determinants, cost determinants, agglomeration determinants and policy determinants. And then, the author discovers those kinds of determinants truly have great influence on Korea’s direct investment in China. Relying on the above analysis, in the following quantitative analysis, first we select some meaningful and accessible variables to represent market determinants, cost determinants, agglomeration determinants and policy determinants respectively, then use multi-variable line regression equation to examine factors, only those who can pass the exam could be regarded as valid determinants. At last, we discover that market size, market degree, labor cost, labor quality, intensity if transport infrastructure, urbanization and policy dummy have some effect on Korea’s direct investment in China. On the basis of the substantial evidence the analytic result the author puts forward some suggestion.