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Prudence is tip for investment overseas

CHINA'S corporations should be prudent when they decide to tap opportunities for overseas investment amid the global financial crisis, economists and industry insiders said yesterday.

"The current global financial tsunami has hit China's outbound investments, but it is also creating an extraordinary and historical investment opportunity for Chinese investors," said Liao Qun, CITIC Ka Wah Bank's chief economist, yesterday. He said that China's outbound investment is seen to jump up to 30 percent annually in the next decade.

Deteriorating corporate profits, the slump in the stock market and the gloomy global economic outlook have put the brakes on China's overseas investment growth in 2008.

"The situation is not likely to change noticeably until the global economy recovers," said Liao. "However, plunging asset valuations and the openness of foreign governments to welcome capital have also created an extraordinary opportunity for Chinese firms to go abroad" for investments.

But Xiong Yan, chairman of China Beijing Equity Exchange, warned yesterday in an article that Chinese companies should be very cautious even at this "golden time" for overseas investments. Chinese firms may be risking higher debts if they rush to invest in their targets without checking due diligence, he said.

Xiong also said that firms should be prudent to ensure they buy the right technology. He also cautioned about labor risks in overseas markets.

A group of 48 Chinese businessmen has departed for Switzerland, Spain, the United Kingdom and Germany to explore potential investments, Commerce Minister Chen Deming said yesterday in Beijing.


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