What challenges do Chinese enterprises face in the process?
External economic uncertainties are mounting up, leading to increasing risks for overseas expansion. The world economy is undergoing profound adjustments, emerging countries are exposed to the aftershock of the global financial crisis, and complicated geopolitical and international security situations are triggering unexpected incidents.
Besides that, the domestic economy is burdened by overcapacity, a high leverage ratio and climbing inventories. Under such circumstances, Chinese enterprises are faced with traditional risks such as economic slowdown, hindered cash flows and structural risks. At the same time, new risks are surfacing including political risks in overseas markets and exchange rate risks.
In addition to traditional trade protection measures such as anti-dumping and antisubsidy measures, the anti-globalization and rising trade protectionism trend is impeding Chinese enterprises from exploring the overseas market.
Enterprises should establish strong risk awareness and maintain confidence in the face of risks. As a whole, the Chinese economy is not likely to encounter systemic risks. Besides, strong measures should be taken to ensure our long-term interests in carrying out large investment projects overseas.
From CMG’s overseas experience, I have four suggestions to overcome challenges:
First, scientific and technological innovation helps renovate business models to better meet market demand.
Second, incorporation of capacity and resources, industries and capital, people and culture should be realized between Chinese enterprises and host countries.
Third, enterprises should remain marketoriented and assess the commercial viability of investment projects from the angle of strategy, return and risk.
Fourth, a sustainable development model needs to be created by shouldering social responsibilities, such as environmental protection, charitable activities and poverty alleviation.
Chinese enterprises, SOEs in particular,