Edited and Translated by People's Daily Online
The fourth annual Bridges China Dialogue was held in Geneva, Switzerland on Aug. 27 and Aug. 28. Attendees discussed the opportunities and challenges facing China's investment abroad and made constructive suggestions for the sustainable development of Chinese companies' seeking to invest overseas.
China's outbound investment still in its infancy
According to statistics from the Chinese Ministry of Commerce, Chinese enterprises invested 68.8 billion U.S. dollars abroad in 2010, ranking fifth in the world. However, China's overall outbound investment is still in its infancy. China’s vice Commerce Minister Chen Jian said at the high-level conference that as a latecomer to the arena of outbound investment, China still has a lot to learn and much potential to develop.
Stéphane Graber, a delegate from the Economic Development Office of the Geneva state government, said that the outbound investments of British and U.S. companies during an economic boom in the last century accounted for about 50 percent of the two countries' total foreign trade volumes. By contrast, the percentage for China is only 6 percent. Therefore, it is true that Chinese enterprises have just set foot abroad.
Rufus Yerxa, deputy director-general of the World Trade Organization, said since China's accession to the WTO 10 years ago, it has taken a responsible attitude toward international trade affairs, made active efforts to advance the Doha Round negotiations and worked hard with other countries to greatly improve the system of global economic governance.
Ricardo Meléndez-Ortiz, chief executive of the International Centre for Trade and Sustainable Development, organizer of the Bridges China Dialogue, also said in an interview that Chinese companies are becoming a leading representative of China in global competition. Their outbound investments have not only boosted their own development but also actively promoted world economic development.
Strengthen research, risk management
Ross Hans, senior adviser for Asian affairs from the Swiss Foreign Ministry, said that Chinese enterprises face risks in many areas, including finance, commerce, product quality, safety and human resources, when they go global. Risk levels vary in different societies, and the key point is how to manage risks scientifically.
Liang Guoyong, an economic affairs officer from the Investment and Enterprise Division of the U.N. Conference on Trade and Development (UNCTAD), said that there were two ways for Chinese enterprises to invest overseas: direct investment and step-by-step investment according to their abilities.
He believes that the latter is more suitable to Chinese enterprises in the long run because such an investment approach is more favorable to risk management. Li Quan, Director of the Program on International Conflict and Cooperation (PICC) at Texas A&M University, said that Chinese enterprises going global should voluntarily avoid "political risks" and should, in particular, strengthen research and improve their abilities for risk management.
Share results of global development
Jeremy Parrish, Standard Chartered Bank's CEO in Switzerland, told reporters that Europe is sinking deep into a sovereign debt crisis, but it is a good opportunity for Chinese enterprises to invest there as investment cost has dropped and Europe has a stronger desire for overseas investment.
He said that despite the comprehensive strategic partnership between China and the European Union, Europe has always been a "weak point" of Chinese enterprises' overseas investment. Chinese enterprises made investments totaling about 7 billion U.S. dollars in Europe in 2010, accounting for only 10 percent of China's total overseas investments.
The high investment thresholds facing Chinese enterprises are the major reason behind their reluctance to investment in Europe. Melendez-Ortiz told People's Daily that the relatively high investment costs in Europe are due to the sound legal system and strict environmental and natural resource management there. Many Chinese enterprises cannot adapt to the circumstances during their early expansion in Europe. Chinese enterprises should have "resilience" and seek hels in terms of laws and regulations from local professional institutions.
William Black, senior vice president and senior partner of Fleishman Hillard, said that the West has yet to get used to China’s unprecedented economic growth pace, which has to some extent hindered Chinese enterprises’ investments in Europe. Melendez-Ortiz also reminded that there are some "noises" in Europe that some European politicians have imposed some obstacles to Chinese enterprises' investments in Europe because of electoral politics.
This will do harm to both Europe and China. Any closed economy cannot achieve development in the era of economic globalization and all economies must learn to share the outcomes of the world development.
Chen said that China should have an appropriate understanding of the attention from around the world and the world should have the right understanding of China's development so as to keep the differences in mutual understanding from hindering mutual cooperation and joint development.
He Yafei, China's ambassador to the United Nations Office in Geneva, said, "Chinese enterprises should bring Europe not only investments but also their confidence and support for the European economy and integration."
