Study On The Factors Which Influence Chinese OFDI Location Selection

Since’Go Out policy’implemented by Ministry of Commerce in2001, the Chinese FDI is growing strongly. The rate of FDI stocks Growth of China among11years is39.8%, twice as high as the World’s FDI stock Growth. The Chinese OFDI stock increased to$660.68billion, at the11th of The World Ranking. Chinese OFDI is already covered184countries and regions, about80%of the world. Although Chinese OFDI is growing strongly, the distribution in countries and state is in an unbalanced situation. In order explain this situation, researchers around the world examined the relationship between motivation, culture and geography, the situation of market in host country and OFDI.In order to make a decision about whether invest or not, the manager must synthesize all kind of factors may infect the development of OFDI. The Psychic distance paradox is a complex indicator contain the factors.An index to operate the psychic distance was established on the basic of theory about The FDI location choice and Psychic distance. The psychic distance construed by Culture distance, Geography distance, The Political system distance and the level of society development. Then an regression between the Chinese OFDI and Psychic distance was made. It can be found that the longer the psychic distance is, the smaller the Chinese OFDI is.Next, an multiple regression was made between the Chinese OFDI and the Culture distance, Geography distance, The Political system distance, the level of society development, the result show that the Geography distance is the most powerful factor which can infect the Chinese OFDI, and the Political system distance is the least powerful factor.The measurement results of the Psychic distance show that Hong Kong is the nearest and the USA in the farthest. And the Psychic distance between the host country and China is not constant. It become smaller slowly.