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English>>China Business

External markets crucial for success of cross-border deals

By Dong Jielin  (China Daily)

07:44, October 27, 2012

Globalization has been the motivating factor for the overseas moves of Chinese enterprises. The financial crisis that has weakened businesses in the US and Europe has also improved the prospects of Chinese companies.

Taking a closer look at the number of overseas investments and projects, it is fair to assume that State-owned enterprises account for the lion's share of the deals so far. Most of these activities have been resource-driven and in Asia, Australia, Latin America and Africa. These activities, however, faced considerable opposition in other markets such as Europe and the US.

Most State-owned enterprises are monopolies or leaders of a domestic industry, and often protected by favorable government policies such as priority financing in the public market. Why is this "national team" favored in the home country now being boycotted in the West?

I have read a lot of emotional articles on this issue in Chinese newspapers. Some people believe that some foreigners are intentionally demonizing Chinese national enterprises.

Though it happens often that people in any country may politicize issues for economic purposes, I think emotional responses will only widen the gap and not be of any help to the Chinese enterprises.

In fact, a huge hiatus exists between Chinese and Western cultural and political grounds, so much so that enterprises that grew up in them often carry their respective cultural genes. Chinese State-owned enterprises display lots of characteristics that are often in conflict with those in the Western world, such as government-ownership, lack of transparency and special political relationship with the government.

In Western societies that value market and private ownership, state-owned enterprises are very few and face lots of restrictions. As a result, the opposition that Chinese State-owned enterprises meet becomes justifiable when they try to break into Western markets. The State-owned enterprises, as a major player in China's going-out process, therefore now see its hands tied in the European and US markets.

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