Ibss workshop

China’s Investments AbroadOpportunities and Challenges.

12th November 2014

Presented by: Abhishek PatelBusiness Administration UG Year 3

Introduction

As China's economic growth continues, both the total volume and types of Chinese investments abroad have grown rapidly. This includes portfolio investments made by the Chinese sovereign wealth funds, SOEs, and private companies in energy, natural resource, agriculture, manufacturing, and real estate.

China’s Global Reach

(Heritage.org)

China’s Investments: USA

(Heritage.org)

China’s Investments: France

(Heritage.org)

Reasons for China’s Global Reach

A clear agreement on the business driven motives of Chinese investments..‘Getting up the value chain’

• Access to markets • Technology know-how acquisition and R&D capability

development• Skilled labour • Develop capabilities to compete better at home

Reasons for China’s Global Reach

Challenges faced by China Abroad

China’s Financial system

With regard to Hong Kong, it is considered that “one

country, two systems” it is unlikely to change because the

mainland understands the benefit of Hong Kong, while the

West trusts the Hong Kong financial and legal system.

Challenges faced by China Abroad

China’s legal system

West still has concerns about the Chinese legal

system. Concerns about lack of transparency,

closed procurement and hidden subsidies.

Other Challenges faced by China Abroad

• Chinese fears non-transparent national barriers and security

concerns. • Countries wants China to offer:

• Market access to their firms in China in return for comprehensive investment protection

• Lack of skills and experience (post-establishment)

Taking an example of Germany, the division of labor – high-tech in

Germany, low-tech in China – chosen in some cases, makes transfer

of know-how and technology difficult.

Challenges faced by China in the EU

Welcoming Chinese Investment in the countries : Opportunities

• Direct benefits, e.g., employment, tax• Indirect benefits, e.g., access to Chinese market• For example, Taking the current low level of

investments in the EU as a positive sign for further growth.

• Growing Chinese investment in developed economies could open up new opportunities for private investment in China’s domestic market.

Most Critical issue while Investing in China

Reasons for China’s Global Reach

“We are still students trying to learn global management. Our overseas workforce is sometimes qualified to be our

teachers in this area. It is very difficult for ‘students’ to manage ‘teachers’ as we go

global.” – Tong Hai Bin, Shanghai Machine Tools

What they say:In terms of the relationship with the Chinese government,

Alibaba founder Jack Ma’s famous words resonate, “Fall in love with them, understand them, but don’t marry them.”

Thank You