Most Chinese companies have no intention of "going international"

Will there be a surge of Chinese investment world wide? Although Chinese companies' attempts to acquire overseas businesses have been talked a lot in town, a survey just released by the Economist Intelligence Unit (EIU) indicating most Chinese enterprises still pay most attention to the home market and show little interest in tapping overseas territory, according to the International Finance News today.

Among the 176 Chinese companies based in the mainland under the survey, 91 percent take the domestic market as their main target within the next three years, 17 percent has the plan to make foray into the southeast Asia or northeast Asia market, 12 percent will choose the EU and Russia, only 11 percent eye the North America.

The report is a joint project by the Bank of America, Deloitte&Touche, and other partners. It is based on a number of interviews with Chinese companies and experts and a quantitative survey of 176 senior executives of Chinese inland companies between May 2005 to June.

The report finds that most Chinese companies in the mainland regard their local peers, such as state-owned enterprises, a bigger rival than foreign competitors. 55 percent of the businesses under the survey said large SOEs are their arch rival, then domestic private businesses.

The investigation and interviews have proved that fast growing Chinese companies, such as Lenovo and TCL, invested overseas either for the acquisition of the brand or for expansion in the face of the domestic cutthroat competition, for example, the home appliance sector. Another reason is to secure a stable supply source of energy and other resources.

Despite of that, a majority of small and medium sized enterprises have made it clear they would target the domestic market, rather than expand beyond overseas to develop new brands or new market.

The report also shows that students who have just left colleges are most favored by these companies. Those who return from foreign schools have lost their shininess because of the high human costs and lack of work experience. Graduates who have just finished their higher education are the first choice of 78 percent of Chinese companies. 62 percent of companies say they will recruit talents from SOEs.

Steven Xu, director of the advisory services with EIU' s China office, thought Chinese companies were getting more mature and another round of reshuffling was likely on the horizon because of the increasing acquisitions and mergers of foreign businesses by Chinese capital.

By People's Daily Online