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FDI TRENDS
 

Chinese Outbound Investment

 
China’s overseas investments have shown significant increases over the past few years. In 2009, Chinese outbound investment reached 56.53 billion USD, ranking No.6 in worldwide, while non-financial sector was 47.8 billion USD, 17.8 times of the 2002 data.
 

Source: 2009 Statistics Bulletin for China’s Outward FDI

 

China is certainly a booming market, and it offers a high potential for FDI. The focus should be on companies with the best long term growth prospects and with high quality projects (inward technology transfer, market access, wealth and job creation etc). However, the market is far from easy: complexity, and competition.

The most dynamic sectors for outward FDI are Resources, Electronics, ICT, Life Science, Creative Industry, R & D, Automotive, Software, Manufacturing, etc.

The sectors such as mining, energy and heavy industry are mostly the few big players on the market. Once there is a deal done, it is much more a governmental action than a pure economical action.

The key drivers for investment overseas are more market share, access to new market, better technology, advanced human resources from the hosting countries, access to foreign capital, and access to raw materials due to the limited natural resource in the homeland.

The Chinese companies going abroad are mainly motivated by the increase of the sales in a new market. The main market entry strategy is mainly to set up own sales office and regional HQs (Greenfield), acquire unsuccessful competitors in the foreign market, and find business partners to form a JV. For the research oriented companies, setting up R & D centers is also a way to get into the foreign market.