Pri­vate firms lead ODI

China Daily (USA) - - FRONT PAGE - By LYU CHANG in Bei­jing lvchang@chi­nadaily.com.cn

China’s pri­vate com­pa­nies have taken the lead over Sta­te­owned en­ter­prises in the coun­try’s surg­ing out­bound in­vest­ment for the first time, a gov­ern­ment re­port said on Thurs­day.

Pri­vate en­ter­prises are lead­ing in both the amount in­vested and the num­ber of merg­ers and ac­qui­si­tions abroad, of­fi­cials said.

The change has taken place as out­bound di­rect in­vest­ment sur­passed for­eign di­rect in­vest­ment last year, also a new phe­nom­e­non.

Pri­vate com­pa­nies ac­count for 65.3 per­cent of the to­tal ODI, which amounted to $145.7 bil­lion by the end of last year, ac­cord­ing to the 2015 Sta­tis­ti­cal Bul­letin of China’s Out­ward For­eign Di­rect In­vest­ment.

Mean­while, ODI surged by more than 18 per­cent last year, ex­ceed­ing the $135.6 bil­lion in for­eign di­rect in­vest­ment, said the re­port, jointly is­sued by the Min­istry of Com­merce, the Na­tional Bureau of Sta­tis­tics and the State Ad­min­is­tra­tion of For­eign Ex­change.

“The pri­vate com­pa­nies have re­ally be­come an im­por­tant force in driv­ing the growth of out­bound in­vest­ment,” said Zhang Xiangchen, deputy in­ter­na­tional trade rep­re­sen­ta­tive at the Min­istry of Com­merce, at a news con­fer­ence. Pri­vate deals ac­count for 75.6 per­cent of the to­tal amount of over­seas ac­qui­si­tions, Zhang added.

Huge, pri­vately owned com­pa­nies that are on a for­eign shop­ping spree to ei­ther up­grade their tech­nol­ogy or di­ver­sify their busi­ness are be­hind the shift.

One fre­quent shop­per, Chi­nese avi­a­tion and ship­ping con­glom­er­ate HNA Group, bought to­tal for­eign as­sets worth at least $17 bil­lion last year.

This year, the pri­vate en­ter­prise ad­vanced its global ex­pan­sion am­bi­tions with ad­di­tional ac­qui­si­tions that in­cluded a 13 per­cent stake in the air­line com­pany Vir­gin Aus­tralia Hold­ings, with an in­vest­ment of $114 mil­lion.

Even though State-owned en­ter­prises still have a com­pet­i­tive edge over their pri­vate peers in such highly reg­u­lated in­dus­tries as elec­tric­ity, en­ergy and min­ing, that has not dimmed the en­thu­si­asm of pri­vate com­pa­nies for over­seas growth.

Wang Huiyao, di­rec­tor of the Cen­ter for China and Glob­al­iza­tion in Bei­jing, said that pri­vate com­pa­nies tend to be flex­i­ble and able to re­spond quickly to the chang­ing en­vi­ron­ment over­seas.

“The pri­vate sec­tor con­trib­utes more to ODI be­cause the sec­tor it­self is grow­ing and get­ting larger. Mean­while, the na­tional anti-cor­rup­tion cam­paign has slowed the State sec­tor’s process of go­ing global, be­cause those en­ter­prises have to ad­just their strate­gies due to the in­tro­duc­tion of new ex­ec­u­tives and lead­ers,” he said.

As Chi­nese com­pa­nies spend more over­seas, the gov­ern­ment is tak­ing more mea­sures to en­sure the se­cu­rity of as­sets and the grow­ing num­ber of Chi­nese work­ing abroad, which al­ready has reached 1 mil­lion, said Zhang of the Com­merce Min­istry.

“We are pro­duc­ing guides to for­eign in­vest­ment and risk as­sess­ment re­ports ev­ery year to as­sist Chi­nese in­vest­ment in guard­ing against risks,” he said. “We are also en­cour­ag­ing Chi­nese in­vestors to bol­ster their risk man­age­ment abil­i­ties and buy in­sur­ance in case of losses or dam­age,” he said.

The pri­vate sec­tor con­trib­utes more to ODI be­cause the sec­tor it­self is grow­ing.” Wang Huiyao, di­rec­tor, Cen­ter for China and Glob­al­iza­tion

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