As multinationals flock to China as a favorite investment destination, an increasing number of Chinese firms are also quickening their pace of going global. This is good news for the crisis-stricken target countries and the sluggish world economy. As they expand globally, Chinese companies can bring much-needed capital and deliver a boost to business cooperation between China and the rest of the world.
There is no need for the international community to worry about China’s growing outbound investments because they are simply market-driven corporate behaviors. As China deepens reform and opening up, more ambitious domestic companies are seeking opportunities to build an international presence and step on to the world stage.
While they look for greater returns outside China, Chinese firms have also honored their social responsibilities. For example, many Chinese companies have built economic and trade cooperation zones in Africa and Latin America, providing a better environment for Chinese investors to expand their businesses and injecting fresh steam into the industrialization of local economies. Chinese enterprises are also helping to improve infrastructure in target nations, including transport and telecom networks, urban drainage systems, schools and hospitals. These efforts helped improve the lives of local residents and laid a solid foundation for local economic growth. Meanwhile, many Chinese firms have set up factories abroad, which generate more jobs and tax revenues overseas.
As an open economy, China is beefing up both investment inflows and outflows. That means the country is harvesting fruits from continued opening-up policies and its concerted efforts to achieve balanced growth. Undoubtedly, China is rising to become a strong force in global outbound investments. This comes as a powerful boost to the world economy, which is sinking into a deep quagmire.
However, China’s outbound investments remain at an initial stage. Chinese companies still have a long way to go to move up the global supply chains. In addition, they need to learn lessons from past failed investments.
The path of going global will surely be a bumpy road. Many Chinese firms are confronted with the daunting challenge of global operations due to a lack of experience, cultural differences and limited access to business information. Worse still, many Chinese companies face restriction barriers when they try to expand offshore.
In the post-crisis period, achieving global economic recovery requires improvement in worldwide allocation of natural resources, capital, technologies and labor. As they press ahead with overseas investments, Chinese companies deserve respect for their remarkable contributions to the restoration of the health of world economy.