Influences of Institutional Differences on Chinese Enterprises’ Investment on Countries in “The Belt and Road” Strategy—Based on Regulatory Effects of Ethnic Chinese in Host Countries

Abstract

While implementing the strategy of “the Belt and Road” in China, different countries along the belt demonstrate huge differences from China. Such differences are an important reason that hinders foreign investments of Chinese enterprises. Based on the perspective of differences between host nations’ systems and Chinese system, the paper discusses the theoretic mechanism of labor exports and foreign direct investments from Chinese enterprises. According the institutional differences between 65 countries along “The Belt and Road” and China, active degree of overseas Chinese and the number of corporate investment projects, the paper adopts zero-inflated negative binomial regression method and empirical research, and finds out: 1) Institutional differences are negatively related to OFDI of Chinese enterprises. In terms of investment on “the Belt and Road” nations, Chinese enterprises are also more inclined to make investments in nations with governance levels more similar to China. 2) The activity of ethnic Chinese in host countries made up the negative impact of the cultural differences on OFDI location selection of Chinese enterprise. 3) Regardless of institutional differences and the host country Chinese network, as for OFDI enterprises motivated by technology research and development, they do not pose significant impacts. The paper contains important enlightenment on how to make the best use of system and labor services export during the process of implementing “the Belt and Road”.