Opportunities and Challenges Facing Chinese Enterprises When “Going Abroad” under New Situations

10 May 2013

China's foreign investment is accelerating, the investment areas are expanding and the subject of investment is diversifying. In addition, judging from the current status of foreign exchange reserves, the appreciation of the Renminbi, the government's attention and other internal and external factors, the pace of outbound investment of China will keep accelerating in the next few years. Chinese enterprises should seize the current favorable opportunities, take advantage of the various policies, proactively seek the “going abroad” opportunities and explore the international market, in order to enhance their strength through transnational business operations.

However, there are still problems during the "going abroad" process of Chinese enterprises. Lots of failures in the outbound investment projects were caused by lack of risk awareness and knowledge of the investment host countries. Cases have shown that issues encountered during the overseas expansion of the Chinese enterprises are myriad and not just limited to economic, ethnic, cultural, political and environmental problems.

For instance, environmental protection regulations of foreign countries are very strict, even demanding, which brings higher requirements for the outbound investment of Chinese enterprises. Chinese enterprises must learn local laws and regulations as well as special ecological and environmental requirements, otherwise even if there was an excellent project and the acquisition was completed, it would be quite difficult to operate and achieve success.

At the same time, Chinese enterprises must enhance their risk awareness during “going abroad” and rely on the strong assistance and support of law firms, accounting firms, investment banks and other relevant agencies in order to realize a faster and more stable "going abroad" investment.

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