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Chinese investors urged to show better image overseas
By Wang Yanlin |
April 18, 2012, Wednesday
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Online Edition
Online Edition
Being the world's second largest economy, China will no doubt increase its outbound investment and cause a redistribution of global resources, economists said at a Shanghai forum today.
But before that, Chinese investors should try to improve their overseas image and correct the impression that Chinese funds are more politically driven than commercially driven.
"The world will see more investment from China, both from state-owned enterprises and private companies," said Xu Sitao, global forecasting director for China at Economic Intelligence Unit.
"With China's per capita GDP approaching US$10,000 a year, China's outbound investment is expected to reach US$200 billion," Xu said at the Chinese Outbound Investment Event 2012.
China became the world's sixth biggest international investor last year with about 200 overseas projects.
According to the Ministry of Commerce, China's non-financial outbound foreign direct investment in 2011 expanded 1.8 percent year-on-year to US$60 billion, with Europe and Africa seeing funds from China surging more than 50 percent.
In the first quarter, outbound investment from China shot up 94.5 percent to US$16.5 billion, reflecting greater enthusiasm among Chinese investors.
"Africa and Latin America are hot spots for Chinese investors right now," said Robin Bew, chief economist and editorial director at EIU. "But Western Europe and North America will become major destinations for Chinese funds eventually."
Bew urged Chinese companies to do better preparation before seeking acquisitions abroad.
An EIU survey showed that only 31 percent of Chinese companies know how to handle a foreign acquisition and 82 percent lack the ability to manage their overseas investment.
For Chinese investors, there may be more obstacles, some of them created by foreign regulators.
Last month, Chinese telecom equipment manufacturer Huawei was barred by the Australian government from bidding for a broadband network contract for "security concerns," and China said it was "unfair."
"Chinese companies need to do more public relations to allay fears and address doubts concerning their investment purpose," Bew said.
"You should explain your business intention, the long-term strategy, or how you will handle the assets, not only to your targeted company, but also the community and local residents," Bew said, noting such actions should be taken before a Chinese investor moves to acquire a foreign company.
Another suggestion from Bew is that Chinese companies should move faster in decision making.
Ge Junjie, vice president at Bright Food (Group) Co Ltd, said Chinese companies are required to adopt a global strategy for better use of international natural, financial and professional resources.
"Our company is accelerating the pace of overseas expansion and will announce in June the acquisition of a French winemaker," Ge said. "Our global strategy has benefited us in expanding the domestic market, attracting more skilled workers and upgrading our production."
But before that, Chinese investors should try to improve their overseas image and correct the impression that Chinese funds are more politically driven than commercially driven.
"The world will see more investment from China, both from state-owned enterprises and private companies," said Xu Sitao, global forecasting director for China at Economic Intelligence Unit.
"With China's per capita GDP approaching US$10,000 a year, China's outbound investment is expected to reach US$200 billion," Xu said at the Chinese Outbound Investment Event 2012.
China became the world's sixth biggest international investor last year with about 200 overseas projects.
According to the Ministry of Commerce, China's non-financial outbound foreign direct investment in 2011 expanded 1.8 percent year-on-year to US$60 billion, with Europe and Africa seeing funds from China surging more than 50 percent.
In the first quarter, outbound investment from China shot up 94.5 percent to US$16.5 billion, reflecting greater enthusiasm among Chinese investors.
"Africa and Latin America are hot spots for Chinese investors right now," said Robin Bew, chief economist and editorial director at EIU. "But Western Europe and North America will become major destinations for Chinese funds eventually."
Bew urged Chinese companies to do better preparation before seeking acquisitions abroad.
An EIU survey showed that only 31 percent of Chinese companies know how to handle a foreign acquisition and 82 percent lack the ability to manage their overseas investment.
For Chinese investors, there may be more obstacles, some of them created by foreign regulators.
Last month, Chinese telecom equipment manufacturer Huawei was barred by the Australian government from bidding for a broadband network contract for "security concerns," and China said it was "unfair."
"Chinese companies need to do more public relations to allay fears and address doubts concerning their investment purpose," Bew said.
"You should explain your business intention, the long-term strategy, or how you will handle the assets, not only to your targeted company, but also the community and local residents," Bew said, noting such actions should be taken before a Chinese investor moves to acquire a foreign company.
Another suggestion from Bew is that Chinese companies should move faster in decision making.
Ge Junjie, vice president at Bright Food (Group) Co Ltd, said Chinese companies are required to adopt a global strategy for better use of international natural, financial and professional resources.
"Our company is accelerating the pace of overseas expansion and will announce in June the acquisition of a French winemaker," Ge said. "Our global strategy has benefited us in expanding the domestic market, attracting more skilled workers and upgrading our production."
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