Abstract: Since 2003, China’s FDI has been maintaining a momentum of rapid growth. As a gathering place of China's FDI, Asia investment stock accounts for more than 70% of the total.. Location choice is an important factor for enterprises’ investing abroad. In recent years, the problem concerning China outward FDI location choice has turned from the initially traditional economic factors to institutional factors. This paper is based on the data of China's FDI in 26 main Asian countries and districts from 2003 to 2011, and through interaction between institutional factor and different FDI motives, we find that: (1) the institutional distance between two countries plays more important a role than institution of host country itself; (2) China's FDI tends to invest in those countries or districts with poorer institution and larger gap in institution with China in general, but smaller institutional gap attracts more China's market seeking and efficiency(mainly financing) seeking FDI; (3) resource-seeking FDI has no significant relation with institution. We further put forward suggestions about south-south invest in the end.
Keywords: Institution Distance, FDI, Location Choice
source:Finance & Trade Economics ,No.6,2014