By Hu Wenpeng, Wang Jin

The government work report proposes to implement the "Go Globally" strategy, to guide Chinese enterprises under various forms of ownership in making overseas investments, mergers and acquisitions in energy, raw materials, agriculture, manufacturing, service industries, and infrastructure in an orderly manner; and to explore new models for overseas economic and trade cooperation zones, and support companies making overseas investments in coordinating their growth and forming clusters.

In 2011, the pace of Chinese enterprises' "going globally" accelerated, with non-financial overseas direct investment amounting to US$ 60.1 billion. In the Annual Sessions of NPC and CPPCC this year, the going globally of enterprises has been heatedly discussed by many deputies, who believe that in spite of current uncertainties in the international economy, Chinese enterprises are now facing a rare opportunity to go globally, as the current purchasing price is relatively lower.     

"As China's economy becomes more dependent on foreign markets, it is imperative that we give support to qualified enterprises go globally", said Yang Zhiqiang, a deputy to the NPC and chairman of the board of Gansu Jinchuan Group.

Coexistence of opportunities and challenges

What are the characteristics of the going globally of Chinese enterprises? Yang Zhiqiang believes that: "Nowadays, the going globally of enterprises is happening in various sectors, at all dimensions, and at extensive levels. In the equipment manufacturing sector, Sany Heavy Industry bought Germany's Putzmeister; in the automobile sector, Geely bought Volvo; and in the energy and resources sector, Chinese companies have also done many things".

However, Chinese enterprises also run into many problems in the process of going globally. Speaking of the chaotic, or even vicious, competition in the process of enterprises' going globally, Ren Qinxin, a NPC deputy and chairperson of the board of Citic Heavy Industries, said from his personal experience: "With continuous internal friction, Chinese enterprises tend to end up suffering losses". It is told that it often happens that a project, which a Chinese company has been negotiating for up to 3 or 4 years, may be snatched by another Chinese company when contracts of the project are about to be signed; moreover, the price agreed upon with the foreign party often produces hardly any profit margin.

It is a prevailing problem that enterprises go globally rashly when they are ill informed of the history, cultural traditions, and legal norms in the location of the investment. It happened before that one Chinese company participating in an overseas investment won the bidding with its low price when the company had only "taken a casual trip" before the bidding and the text of the contract was "partially translated". The company ended up being forced to abort the project before due time because the cost had ran out of control, and a compensation of US$ 271 million was demanded from the company. Ma Chunji, a NPC deputy and chairperson of the board of Sinotruk Group, made a vivid comparison: "it's like playing the chess. Before you go globally, you are playing the Chinese chess; after, you are playing the international chess. If you don't learn the rules of the game beforehand, how can you ever win it?"    

In recent years, many medium- and small-sized enterprises have also joined the trend of going globally. Lu Kesong, a NPC deputy and chairperson of the board of Jiangsu Fuan Cocoon & Silk Joint-stock Limited Company, said that: "Most medium- and small-sized enterprises that have gone globally face such problems as excessive operational cost, fragile capital supply chain, and low risk resistance capacity, among others".

Combination of self-improvement and aid

"Enterprises should work hard to improve themselves. Meanwhile, the government should do its part properly. Only with self-improvement and government aid can enterprises achieve the goal of going globally successfully", said Lu Kesong.

For enterprises, funding is a more pressing issue. Du Bo, a NPC deputy and Party Secretary of Qingjian Group, said that: "It's totally possible for Chinese enterprises to make use of foreign capital to go globally. For example, in our operation in Southeast Asia, every investment of RMB 1 Yuan would pry up RMB 4 Yuan of foreign capital. The lever effect is huge".

To enhance enterprises' risk resistance capacity in going globally, Du Bo suggests that domestic companies should strength cooperation. "Ally with one another, form a ��fleet' to go out there, establish scale effect, and enhance the risk resistance capacity and market competitiveness of enterprises in foreign markets. Medium- and small-sized businesses, particularly, should try this method at the early stage of their going globally." 

As for the question of how enterprises can adapt to foreign environment more quickly, Ren Qinxin has his hope: "I hope the government has specialized agencies that conduct study and analysis on the politics, economy, culture, legal system, and main investment elements of other countries and regions, provide investment guidance, and strength risks warning, so that Chinese enterprises have something to look to when they are going globally."

Besides, in order to protect enterprises in going globally, An Guofeng, a NPC deputy and director of the Bureau of Finance of Zhangye City in Gansu province, suggests that in the meantime of encouraging and supporting enterprises to go globally, the government should accelerate efforts to establish investment consultant institutions that are competent, professional, and highly internationalized, and intermediary service institutions of finance and law, so as to provide powerful support to the going globally of Chinese enterprises.