(Photo 3: A refrigerater manufacturing plant of Haier at Pakistan Haier-Ruba Economic Zone in Lahore, Pakistan. The Haier-Ruba Economic Zone, jointly built by Chinese Haier Group and Pakistani Ruba Group in November 2006, is the first China overseas trade and economic cooperation zone.)
BEIJING -- With the implementation of the Belt and Road Initiative, more and more Chinese enterprises have quickened the pace to go global amid the slowdown in the domestic economic growth.
The "going global" has become an important means for the domestic competent enterprises to get them out of difficult situations, rapidly obtain high-quality assets overseas and realize allocation of global resources.
Meanwhile, the active investments by the foreign trade enterprises reflect their internal needs. The overseas M&As can help them enhance competitiveness and broaden their overseas channels, said Li Ming, PwC China advisory services leader in Central China.
At the beginning of 2016, Haier Group, a renowned home appliance maker in China, announced to buy the household appliances department of GE for 5.4 billion U.S. dollars.
It is reported that in order to deeply implement the internationalization strategy, Haier has carried out the localization strategy in many countries and taken measures, like building production bases, design centers, trade companies and R&D centers overseas, to drive up its exports.
Chery Automobile has also exported its products to 80-odd countries and regions and already built or been building 15 completely knocked down factories overseas. Through those production bases, influence of its automobile products has extended to the automobile markets in Asia, Europe, Africa, South America and North America.
Under the circumstances of the demand contraction in the international market and the rising labor costs, the Shanghai Silk Group has rolled out the "LILY" brand and set up branches in Russia, Japan, Thailand, Indonesia, Saudi Arabia, etc.
Data of the Ministry of Commerce shows that China's non-financial outbound direct investment (ODI) in the first four months soared 71.8 percent year on year to hit 391.5 billion yuan (about 60.1 billion U.S. dollars). Domestic firms invested a total of 4.9 billion U.S. dollars, up 32 percent, in 49 countries involved in the Belt and Road Initiative.
Meanwhile, the PwC data shows that the enterprises in the Chinese mainland concluded 115 deals of overseas M&As in the first quarter of 2016, with the transactions reaching 82.6 billion U.S. dollars, surpassing annual amount of the previous years.
Despite the acceleration in the "going global" and the rise in overseas M&As, the Chinese enterprises have to pay high attention to risk management and strengthen project investigations, said experts.
Before going global, the domestic enterprises have to carry out adequate assessments and analysis, do a good job on due diligence, and strengthen project risk assessments. In the process of overseas M&As, they have to focus on the industries that they are familiar with and avoid blind acquisitions. After the M&As, it is crucial for them to integrate the resources and incorporate themselves into the local business management, according to Kong Fuan, an official of the Shanghai Municipal Commission of Commerce.
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