Rather than evading intensified competition at home, leading domestic companies claim their overseas investment mainly aims to expand their market presence, secure raw material supplies and seek advanced technology, according to a survey report by Roland Berger Strategy Consultants, a leading European consulting firm.
Among the 50 leading domestic firms surveyed, such as electrical appliance giant Haier, and China National Offshore Oil Corp, 56 percent said they invest abroad because they want to crack the overseas market.
The report said domestic companies have an advantage in traditional areas such as television, air conditioner and computer manufacturing.
This, along with relatively low labour costs, has made their products competitive in overseas markets, and encourages them to invest directly in foreign countries.
About 20 percent of those surveyed named the desire to secure natural resources as the most important factor to prompt them to invest abroad.
The report said China has been a large importer of many resources such as mineral ore, chemicals, oil and natural gas, which makes the resource-reliant companies increasingly vulnerable to fluctuations on the international market. To ease the supply shortage and reduce import costs, Chinese companies have been active in acquiring oilfields and mines overseas.
Another 16 percent said they believe the acquisition of foreign firms is a shortcut to obtaining key technology essential for sustaining their development.
Eugen von Keller, president of Roland Berger's Asia branch, expects the overseas investment by Chinese firms to accelerate in the coming years due to the rapid economic development in China.
Roland Berger's annual revenue growth in China has increased by more than 50 percent over the past four years, outperforming the industry average of 30 percent.
(China Daily July 31, 2003)
