Research On The Influence Of Cultural Distance On China’s OFDI

The countries along the Belt and Road have great differences in its development history,religious beliefs,customs and habits,language and culture due to historical factors and realistic reasons.With the continuous promotion of the Belt and Road initiative,the impact of cultural distance on Chinese enterprises’ outward direct investment in countries along the Belt and Road is growing.However,there is no unified and clear understanding of the impact of cultural distance on FDI.Based on this,this paper focuses on the impact of cultural distance on foreign direct investment,and analyzes the research of cultural distance on foreign direct investment from two aspects of theoretical discussion and empirical research.This paper first introduces the research background and significance of this paper,investigates the research status at home and abroad,and establishes the research foundation of this paper.Then it analyzes the current situation of China’s direct investment in the countries or regions along the Belt and Road from three aspects: the scale,the regional distribution and the industry distribution.On this basis,it summarizes the risks of China’s direct investment in the countries along the Belt and Road.This paper focuses on the mechanism of the influence of cultural distance on foreign direct investment.The negative impact of cultural distance on foreign direct investment is mainly reflected in three aspects: increasing transaction costs,causing preference differences and causing cultural conflicts;the positive impact of cultural distance on foreign direct investment is mainly reflected in helping to bring comparative advantages to multinational enterprises and creating more for them Investment opportunities.Then,we select the relevant research variables to construct the model of the impact of cultural distance on foreign direct investment.The cultural distance variable is based on Hofstede’s cultural dimension theory,and is calculated by using the KSI index formula proposed by Kogut and Singh and Euclidean spatial distance measurement method respectively.This paper selects the panel data of 35 countries along the Belt and Road from 2007 to 2018 as research samples to carry out empirical research.The results show that cultural distance has a significant negative impact on Chinese enterprises’ direct investment in the countries along the Belt and Road.Finally,this paper summarizes the research,and then puts forward reasonable suggestions for Chinese enterprises to carry out foreign direct investment in countries or regions along the line from the government level,industry level and enterprise level.