Location Choice Of Chinese Investment In ASEAN From A Firm Heterogeneity Perspective

The establishment of the association of south-east Asian nations (ASEAN) has created a large emerging market economy contains six hundred million people. The ASEAN has became a world-class foreign defined due to its important geographical location, rich natural resources, cheap labor. The member countries of ASEAN are actively introducing of foreign capital involved china’s. In recent year, China’ economic development has encountered problems like the shortage of resources, rising costs of labor force, overcapacity of major industrial products etc. In order to solve these problems, the Chinese government actively advocate enterprises to invest in other countries. Due to the association of south-east Asian nations and China have a lot of contacts on history, economic, culture, geographical position, so a lot of Chinese enterprises with technical superiority invested in ASEAN.Under such a background, China’s academic field has made a lot of study about Chinese investment in ASEAN, but the study about location choice of Chinese investment is relatively less, and the most of these study were from a macroscopic perspective. This paper will adopt the firm heterogeneity theory to study the location choice of Chinese investment in ASEAN from both the microscopic perspective and macroscopic perspective.The first step of study is to analyze the characteristics of Chinese enterprises and south-east Asian nations’ location factor, then I will use the ordered dependent model to build relationship between these factors, and use the maximum likelihood method to estimate the model. The estimated results show that Chinese enterprises with higher productivity, larger scale can invest more countries in ASEAN, and the ASEAN with smaller market size,worse infrastructure, less wages can attract more Chinese investment. The results are different from the firm heterogeneity theory’s,so this study will extends the research about Chinese investment in ASEAN and the theory of firm heterogeneity, it’s benefit for Chinese investors and government to generate the foreign investment strategy.