Export Or Foreign Direct Investment

In recent years, with the sustained and rapid development of China’s economy, theeconomic disadvantages caused by over-reliance on export has been gradually revealed.Faced with the impact of the global financial crisis, the world economy market is inrecession. China needs to change the traditional trade promoting economic growth mode inurgent need, and change the "world factory" embarrassing situation. Enterprises chooseForeign Direct Investment can grow their own strength in large part, and circumvent tradebarriers. However, the scale of China’s Foreign Direct Investment lags far behind export.What factors affect Foreign Direct Investment, and can Chinese enterprises achieveForeign Direct Investment instead of export is the center of this study.In this paper, the author combines the Trade and Investment Integration Theory andNew-New Trade Theory, uses theoretical analysis, mathematical analysis and empirical testto analysis the macro and micro factors which impact Chinese enterprise’s foreign businessstrategies. The author builds mathematical models for maximize profits of enterprises inexport and Foreign Direct Investment, to analysis factors which impact Chineseenterprise’s foreign business strategies in mathematical way. Meanwhile, according to thetheory of Mutual trade and Investment Alternatives in Trade and Investment IntegrationTheory, the author analysis the macroeconomic factors from the national level whichimpact Chinese enterprise’s foreign business strategies; and based on enterpriseheterogeneity hypothesis in New-New Trade Theory, the author analysis the corporateproductivity from the micro perspective impacting Chinese enterprise’s foreign businessstrategies. The results show that: the larger market size of the host country, the higher tradecosts, the lower of host country’s labor prices and higher corporate productivity tends topromote Chinese enterprise to choose Foreign Direct Investment to do foreign business.Based on the above analysis, the author make suggestions for Chinese enterprise’s furtherForeign Direct Investment. In respect of country’s aspect, the government should providerelated services, and establish international multilateral cooperation mechanisms; in respectof enterprise’s aspect, the enterprise should know its productivity level, and make effort toimprove core technology level.