Chinese enterprises need to learn free competition

16:58, November 01, 2010      

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Chinese enterprises are still in the process of learning how to participate in free competition on the international market when they go global, and industrial guilds should take the responsibility of educating and disciplining their members on free competition, said Chen Jian, China's vice minister of the Ministry of Commerce, on Nov. 1 in Beijing.

Vicious competition in which several Chinese enterprises outbid each other for the same overseas project is getting relaxed in recent years. However, it takes time to go from vicious competition to healthy competition and further to good operation order. China has been on the way of building its market economy for only 20 years so far. That is why Chinese enterprises still do not have a good idea about competition, Chen said. As a result, they made too big or wrong investment decisions on the overseas market.

Chen called for understanding of the lack of experience and knowledge of free competition in Chinese enterprises. But he hopes that the process of learning be as short as possible.

"They need education. It's more like a primary student who is supposed to graduate in three years while they used to do that in five years," he said.

At the same time, Chen stressed that the government, responsible for rule making, was not supposed to coordinate between enterprises for their investment decisions. Instead, guilds should improve their ability in coordinating the resources more effectively within the industries they are in. Chinese enterprises have made a lot progress in recent years, although they still lag far behind those multinationals from other countries, Chen commented.

Chen also expressed high hopes for private enterprises in the "going global" endeavor. Private companies only account for 5 to 7 percent currently in the statistics of China's outbound investment. Some of their outbound investment has not been reflected by the statistics.

The majority of Chinese private companies are small and medium-sized enterprises (SMEs). But Chen is very confident about the prospect of their increasingly important role in China's total outbound investment due to their "very good operation mechanism."

The senior commerce official stressed that there is no discrimination against private companies in terms of management and policies regarding their overseas investment. There is a joint mechanism facilitating outbound investment by Chinese private companies through the Ministry of Commerce, Ministry of Finance and the All-China Federation of Industry and Commerce, the non-governmental chamber of commerce for non-public enterprises and business people.

By Li Jia, People's Daily Online


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