Abstract: The stability of trade is the basis for the upgrading of export structure, and diversification of target market is an effective way to reduce export risks and improve trade stability.With the framework of heterogeneity, the paper tests the influence of market diversification on export volatility of firm, and analyzes the influence mechanism through risk diversification and experimental exports based on China′s enterprise- product- target market customs data in 2000-2006. The study found that: market diversification can significantly reduce the export volatility of firms through risk diversification,and this result remains robust after we excluded the sample of processing trade and trade intermediaries, and replaced the measurement of market diversification; as the existence of experimental exports, export volume can enhance the the impact of market diversification on export volatility,but as for small exporters, the higher the degree of market diversification, the greater the export fluctuations; according to the export volume and ownership type of firms, it is found that market diversification has the most obvious effect on export volatility for large-scale state-owned firms. The trade between China and western countries accounts for a large share of the global trade. In order to lower trade risks and reduce the concentration of export markets, China should selectively cultivate and develop new trading partners in addition to maintaining and consolidating export trade links with developed countries.

Key words: market diversification, export volatility, risk diversification, experimental exports, export volume