The Imbalance Between Product Quality Supply And Product Quality Demand And Chinese Industrial Enterprises' Outward Foreign Direct Investment

China's economy has shifted from a stage of rapid growth to a stage of high-quality development.With the development of economy and the continuous growth of per capita income,domestic residents' demand for quality is constantly increasing.However,the supply of domestic high-quality products is insufficient,unable to meet the personalized and high-end demand,resulting in the imbalance between product quality supply and product quality demand.On the one hand,there is excess capacity of low-quality products,which calls for urgent transfer.And foreign direct investment can gain access to the local market and realize the transfer of low-quality products.On the other hand,the supply of medium and high-end quality products is insufficient,so it is urgent to upgrade the industry and improve the supply structure.The improvement of product quality needs the support of technology,which can be obtained mainly through internal independent research and innovation or external acquisition.For external acquisition,foreign direct investment may through the technical spillover effect to improve their home country technical efficiency,improve the enterprise innovation performance and increase productivity.Therefore,OFDI to developed countries is an effective channel for enterprises to overcome the constraints of internal resources and cross the technological frontier,promote industrial upgrading in their home countries,and improve the current situation of insufficient supply of high-quality products in China.For enterprises,against the background of rising protectionism and uncertain trade policies,exports are greatly affected,and relying on low prices for export advantages cannot be long-term.So,enterprises are in urgent need of transformation and upgrading to form their own advantages through improving product quality and alleviate the imbalance between product quality supply and product quality demand,which in turn forces Chinese enterprises to conduct foreign direct investment.This explains the increasing OFDI by Chinese enterprises in recent years and the simultaneous investment in developing and developed countries.In order to verify the above conjectures,this paper firstly sorts out and analyze the existing literatures abount OFDI,product quality supply and product quality demand,and the influence of supply and demand on OFDI.Then on the basis of existing research literature,this paper analyzes the possible influence of the imbalance between product quality supply and product quality demand on the OFDI and the possible mechanism of such influence.The imbalance between product quality supply and product quality demand may force enterprises to improve productivity to increase their competitiveness,and may result in the excess profit of enterprises due to the widening of quality spread,which meets the entry cost of OFDI.After theoretical analysis,through using enterprise micro-level data from 2004 to 2013,this paper calculates the product quality by referring to Shi's method(2013),and further calculates the indicator of the imbalance between product quality supply and product quality demand,as well as other control variables that may affect the OFDI of enterprises.Then,by referring to the existing literatures,an enterprise-level probit two-value selection model is established,and the empirical test mainly draw the following conclusions: first,in the full sample test,it is found that the imbalance between product quality supply and product quality demand significantly promotes the OFDI of domestic industrial enterprises,regardless of whether the industry and regional effects are controlled.Secondly,it is found in the heterogeneity test that the imbalance between product quality supply and product quality demand have a significant positive effect on the OFDI of enterprises only when it reached a certain degree.Moreover,this driving effect is limited by the enterprise productivity level.Only when the enterprise reaches a certain productivity level,the imbalance between product quality supply and product quality demand can positively promote the OFDI of the enterprise.In the subsample test of enterprise ownership,this paper finds that the imbalance between product quality supply and product quality demand has no significant impact on the OFDI of stateowned enterprises,while the imbalance between product quality supply and product quality demand has a significant positive impact on the OFDI of non-state-owned enterprises.Then,considering that the effect of the imbalance between product quality supply and product quality demand on enterprises' OFDI may lag behind,this paper conducte one lag period test,and the result shows that the imbalance between product quality supply and product quality demand significantly promote enterprises' OFDI.In addition,according to Yu's method(2017),this paper re-calculates the product quality data used in the measurement of the imbalance between product quality supply and product quality demand,and then carries out robustness test.The result is consistent with the basic regression.Finally,through the intermediary effect test of enterprise productivity and profit margin,the possible influence mechanism proposed above is verified.Results show that the imbalance between product quality supply and product quality demand has significant positive relationship to the enterprise productivity,indicating that the imbalance between product quality supply and product quality demand can promote enterprise's foreign direct investment by improving enterprise productivity.In addition,the regression coefficient of the imbalance between product quality supply and product quality demand is significantly positive,which indicates that the imbalance between product quality supply and product quality demand,in addition to the indirect effect through the enterprise productivity,has a strong direct effect on OFDI.Similarly,the imbalance between product quality supply and product quality demand has a significant positive impact on the profit margin of enterprises within 1%,which indicates that the imbalance between product quality supply and product quality demand may increase the profit margin of enterprises,thus promoting the enterprises' OFDI.