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Quality concern the biggest problem for China's outbound investment
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17:29, April 24, 2009

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A survey report recently issued by the China Council for the Promotion of International Trade (CCPIT) revealed that the biggest challenge that Chinese enterprises have met with in their overseas investment are the concerns of overseas consumers over product quality and safety.

Other major challenges include difficulties in financing, a lack of understanding of local laws and regulations and risks, low levels of recognition of Chinese brands among local consumers, as well as a lack of professional talents in Chinese enterprises.

In addition, the financial crisis has had big impact on the outward investment plans of Chinese enterprises. Over half of the enterprises said that they would reduce the amount of their outward investment following the outbreak of the financial crisis, and nearly 18 percent of enterprises stated that they are planning to change the destination country or the sector of their investment. Only 7 percent of the enterprises said that they will increase the amount of their outward investment.

The enterprises interviewed were generally satisfied with the degree of openness to invest in various countries or regions around the world. Using a five-grade marking system, all countries or regions were given a grade higher than three, meaning that they range from having an open degree of investment to having a fairly open degree of investment. North America has become the most open region to Chinese enterprises, followed by Southeast Asia and Australia.

Generally, the interviewed enterprises were satisfied with the Chinese government's policy to encourage their "going abroad" development. Of the various policies, respondents were most satisfied with the fiscal and taxation policies as well as the policies on investment management. At the same time, policies on credit insurance and foreign exchange management had the lowest degree of satisfaction.

Zhang Wei, Vice Chairman of the CCPIT, said that foreign enterprises have seen the value of their assets shrink, which reduces merger and acquisition costs for multinational investment. To stimulate their domestic economies, foreign governments are improving their investment environment to attract overseas investment. Changes in the economic environment have made it easier for good quality Chinese products with low prices to expand their markets and build brand names.

Chinese enterprises need to quickly gain an understanding of changes in the international investment environment and of potential business. They also need to grasp opportunities, enhance their risk prevention capabilities in overseas investment and take a cautious but resolute attitude to the "going abroad" development of their multinational investment and operations.

In the first quarter of this year, 445 enterprises set up overseas companies, up 6.8 percent year-on-year. Outward direct investments in non-financial projects reached 3.7 billion USD, and a batch of major projects is in the process of negotiation and implementation.

In 2008, China's foreign direct investment totaled 52.15 billion USD, increasing by nearly 100 percent compared to 2007.

By People's Daily Online

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