Assistant Minister of Finance Wang Jun said Tuesday that more
support should be provided to companies that are expanding
operations overseas. Wang was speaking at an international forum on
Chinese companies' global investment strategies, sponsored by the
Ministry of
Commerce.
He said it is important for China to learn from the initial
"going global" strategies of firms in developed countries.
Wang said major developed countries have systematically provided
a wide range of supportive financial and taxation policies with
regard to overseas investment.
The establishment of overseas investment funds is a common
practice in the financial sector, while these governments often
allow large tax write-offs for machinery, raw materials and
semi-finished products that have been exported for overseas
investment, Wang added.
These policies have greatly encouraged enterprises in developed
countries to invest overseas and propelled the development of their
multinational corporations, he said.
"We should study and construct supportive policies for the
promotion of overseas investment soon within the framework of the
World Trade Organization rules," Wang said.
Shao Ning, vice-chairman of the State-owned Assets
Supervision and Administration Commission, said corporate
expansion overseas is a strategic issue for China's medium- and
long-term economic development.
Large Chinese enterprises will provide China's economy with
broad space for development if they survive international
competition and grow even stronger, Shao said.
"In the opposite scenario, the national economy is very likely
to slow down owing to market constraints," he said.
Shao said the commission will reduce the number of
administrative approvals required and give large state-owned
enterprises decision-making powers on investments to help them
enter the international market.
The commission was set up early last year to supervise
state-owned enterprises, which are mostly large and continue to
play an important role in the national economy.
Wang Zhile, director of the research center on transnational
corporations, said Chinese companies face more difficulties in
growing into multinationals than transnational companies based in
other countries.
Some companies have not completed the construction of a modern
enterprise system during the transitional period from a planned to
a market economy, but they have to deal with global competition
while reforming their management structure, Wang said.
Moreover, emerging Chinese multinationals will experience strong
resistance from existing multinationals, which have dominated their
respective industries for a long time.
But Wang said foreign countries and companies should harbor a
friendly attitude to Chinese investment, which actually aims to
create a win-win solution.
Zhou Yucheng, chairman of the China Huayuan Group--one of
China's largest textile and pharmaceutical groups--said its
invested factories in foreign countries have been local stars
because of the benefits they offer. For example, its textile
company in Mexico has an annual local purchase of US$15 million,
which indirectly provides 5,000 job opportunities.
The group has a total overseas investment of US$300 million in
the United States, Mexico, Canada, Niger and Thailand, and has
3,500 foreign employees.
China's rise as a global investor has been noted by many foreign
countries, which hope to be destinations for this cash.
Many investment promotion organizations are present at the
forum, including the Korea Trade-Investment Promotion Agency, the
Japan External Trade Organization, the Singapore Economic
Development Board and United Kingdom Trade and Investment.
China's outward investment reached US$2.1 billion last year, a
small figure compared to its potential, but a year-on-year rise of
112 percent.
Chinese enterprises are at the threshold of becoming major
foreign direct investors in Asia and beyond because of their
financial strength and exposure to international business.
(China Daily May 26, 2004)