Global expansion and cooperation set to pay dividends

State-owned enterprises are stepping up efforts to expand their presence in overseas markets as part of the ongoing reform program.

For example, SOEs in the energy sector have been exploring overseas business in both developing and developed markets by teaming up with foreign enterprises in the upstream and downstream sectors.

In response to the Belt and Road Initiative, China National Offshore Oil Corp, the country’s largest offshore oil and gas producer, has been eyeing more overseas opportunities for its offshore drilling and completion technologies at high-temperature and high-pressure gas fields.

By the end of 2016, as much as 37.5 percent of the company’s proven net reserves came from overseas markets, and its overseas businesses accounted for 34.8 percent of output, the company said.

Established in 1982, CNOOC has joined with numerous countries and regions in international energy cooperation, increasing investment overseas, enlarging its footprint overseas and optimizing its investment structure.

CNOOC’s global asset allocation covers more than 40 countries and regions, and the company has launched several world-class projects in countries and regions participating in the Belt and Road Initiative. In total, 34 sets of large marine equipment have been exported, offering services including oil-gas exploration, drilling, installation and production, in more than 30 countries and regions.

The company has 6,114 employees overseas, including 4,331 local people, with the localization ratio reaching beyond 70 percent.

Analysts said the international market has substantial potential for China’s SOEs.

“With some of the sectors seeing overcapacity and growth bottlenecks, and given the potential digging market overseas, going global is a wise choice for SOEs,” said Xu Jiabin, a professor in the International Business and Economics Department at Renmin University and a member of the National Manufacturing Strategy Advisory Committee.

“With decades of experience and expertise gained in the domestic market, the overseas market will be the next growth driver for these companies.”

The ongoing reform of SOEs is also providing support for companies’ plans to go global, he said.

Xiao Yaqing, chairman of the State-Owned Assets Supervision and Administration Commission, said SOEs will accelerate their internationalization processes and gradually evolve into world-class businesses.

“Despite the massive size of the country’s SOEs, there is an obvious gap between them and world-class enterprises in the West,” he said. Xiao added that at present, SOEs are mainly reliant on the domestic market, but as China continues to open up, their internationalization should be promoted further.

“The process should be implemented through cooperation between Chinese SOEs and foreign enterprises,” he said.