Go Out policy

Go Out policy[1] (Chinese: 走出去战略; pinyin: Zǒuchūqū Zhànlüè) is the People's Republic of China's current strategy to encourage its enterprises to invest overseas.

Most nations favour actively attracting inward foreign investment, and would only support outward foreign investment passively. The People's Republic of China, however, attaches importance to both inward and outward foreign investment.

Causes

History

The Go Out Policy (also referred to as the Going Global Strategy) was an effort initiated in 1999 by the Chinese government to promote Chinese investments abroad.[2] The Government, together with the China Council for the Promotion of International Trade (CCPIT), has introduced several schemes to assist domestic companies in developing a global strategy to exploit opportunities in the expanding local and international markets.

The programs launched so far by the Chinese Government have these goals in mind:

  1. increase Chinese Direct Foreign Investment (FDI)
  2. pursue product diversification
  3. improve the level and quality of the projects
  4. expand financial channels with respect to the national market
  5. promote brand recognition of Chinese companies in EU and US markets

Since the launching of the Going out Strategy, interest in overseas investing by Chinese companies has increased significantly especially among State Owned Enterprises. Statistics indicate that Chinese direct foreign investments rose from US$3 billion in 1991 to US$35 billion in 2003.[3] This trend was underscored in 2007, when Chinese FDI reached US$92 billion.[4] This boost in foreign investment can also be attributed to the Chinese Government's ability and commitment to create the right environment for foreign investment; and China's huge production capacity, coupled with low labor costs. With a dynamic economy, and a strong business-friendly culture, the outlook for Chinese companies will continue to be positive.

As part of its efforts to restructure state-owned enterprises, the Chinese government has established the SASAC (State-Owned Asset Supervision Administration Commission), which develops China's equity exchange market, while supporting Chinese foreign investments. SASAC's responsibilities include:

  1. supervision and evaluation of state-owned enterprises
  2. oversight of state-owned assets
  3. recruiting of top executive talent
  4. drafting of laws, administrative rules and regulations that promote increased development of corporate law in China
  5. coordination of local state-owned assets as prescribed by law[5]

The SASAC operates through several equity exchanges such as CBEX (China Beijing Equity Exchange), which is the largest and most prestigious in terms of trading volume. It is headquartered in the heart of Beijing financial district. Presently, CBEX has established three international platforms in Italy, Japan and the United States of America. The Italian CMEX (China Milan Equity Exchange), created in 2007, is CBEX's first international partner, operating as a liaison to facilitate the penetration of Chinese companies into the Italian and European markets and of European companies in China. Following the trend of the Go out policy, some of the most prominent Chinese professional institutions are expanding their business on the international markets. King & Wood Mallesons, the largest Law Firm in China with more than 800 lawyers and lobbyists, opened branches in various cities of the United States and Japan, while Grandall Legal Group (one of the most prominent Chinese Law Firms, with a staff of more than 600 professionals) through its International Department has established a European hub called the “China-Europe Legal Group” to assist Chinese companies in legal and lobbying work operating and expanding in Europe. Carone & Partners is a member law firm of the “China-Europe Legal Group” in Italy.

Recent examples of the Go out policy

The following list of M&A transactions performed by Chinese companies overseas are just some of the most notable examples of the successful implementation of the Go out policy:

There are also many more recent examples of smartphone app makers who have branched out globally.

See also

References

  1. ↑ Steve Wang, Lin Wanxia (19 November 2016). "Hunger for foreign know-how propels surge in Chinese ODI". www.atimes.com. Retrieved 21 November 2016.
  2. ↑ 更好地实施“走出去”战略 2006年03月15日
  3. ↑ UN report: China becoming major investor abroad January 07, 2004 People's Daily Online
  4. ↑ China's direct investments abroad top $92b by 2007 2008-04-17 Xinhua
  5. ↑ Main Functions and Responsibilities of SASAC
  6. ↑ Chen, Shu-Ching Jean (2008-06-25). "China's 'Go Out' Policy A One-Way Street". Forbes magazine.

External links

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