Outbound FDI increases by 123%

October 02, 2006 | BY

clpstaff &clp articles

Foreign investment by Chinese companies (excluding banks) jumped 123% to US$12.3 billion in 2005, according to a report released by China's Ministry of…

Foreign investment by Chinese companies (excluding banks) jumped 123% to US$12.3 billion in 2005, according to a report released by China's Ministry of Commerce and National Bureau of Statistics. Limited liability companies accounted for 32% of the investors, surpassing state-owned enterprises' share of foreign direct outbound investments.

Over 60% of overseas investments came from coastal areas such as the Zhejiang, Guangdong and Shandong provinces. Hong Kong, the US, Japan and Russia were the main investment destinations for Chinese companies.

Analysts say that overseas investments are expected to grow by US$60 billion from 2006 to 2010, with resources, high-tech and branded manufacturing industries being Chinese companies' main targets.

Approvals for foreign investment from the Ministry of Commerce reached 1,067, with China's top companies looking to diversify their skills by entering overseas markets, as well as to secure raw materials and energy supplies, acquire global distribution networks, improve access to technology and improve management skills.

Despite the increase in outbound investment, China is not a big international investor compared to the US$60.3 billion in foreign investment which entered China in 2005. Chinese companies are still considered immature, with little experience of foreign markets. Experts say the scarcity of people with knowledge of international business rules, cultural backgrounds, legal documents and adequate internal management systems remain a hindrance for most Chinese companies looking outbound.

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