Abstract: 　　　This article compare the effect between cost of international trade and institutional environment on FDI location using 120 city data. We find that foreign companies heavily dependending on international market, domestic transport costs affect the FDI location significantly; foreign companies to enjoy national treatment in protection of property rights and other aspects, is not sensitive to the level of protection of property rights, contract execution efficiency, and the degree of government intervention . This conclusion has nothing to do with the sample selection, and are not subject to the variable impact of infrastructure, market size, foreign agglomeration and economic geography.