Abstract: Psychic distance is the dominant factor to affect the location choice of OFDI. Based on DOW′s psychic distance dimension and from the view of international experience, the article builds a psychic distance dimension system including language, culture, religion, education development, industrial development, political system, geographical distance, technological innovation level and overseas Chinese network, and empirically analyzes the effect of psychic distance on the location choice of Chinese OFDI and the moderating effect of international experience on the relationship between psychic distance and Chinese OFDI location choice by using the samples of top 50 economies of average GDP in the world from 2006 to 2015. Empirical analyses show that psychic distance has negative effect on the location choice of Chinese OFDI, other dimensions of psychic distance have negative influence on the location choice except the level of education development and industrial development, international experience positively moderates the relationship between psychic distance and the location choice of Chinese OFDI. These findings suggest that in order to promote the OFDI process, Chinese enterprises should improve their understanding of host countries′s culture, institutions, religions, etc., pay more attention to technological innovation and human capital inputs, vigorously expand the overseas Chinese network, further study and accumulate related OFDI experience.

Key words: psychic distance, OFDI, location selection, experiential knowledge