China has become one of the major destinations for foreign investment in the world today. Statistics from the Chinese Ministry of Commerce indicate that some $60.5 billion worth of foreign investment had been brought to the country in 2005. This large-scale utilization of foreign capital has greatly fueled local economic growth and integrated China even more into the global economy. In contrast to the heavy absorption of foreign investment at home, however, the country’s business investment abroad remains insignificant. Official data show that the combined overseas investment made by Chinese enterprises stood at $6.92 billion last year, accounting for a mere 0.8 percent of the world total of $897 billion. This is incommensurate with China’s status as one of the fastest-growing economies in the world.
With competition for profits and resources getting tougher than ever, an increasing number of Chinese enterprises are planning to set up their business beyond the home market. For them, overseas business operation may pose as an essential option for corporate development, as it will not only bring more market share and revenue, but also help to make them more adaptable to tougher competition in the global market. Some Chinese enterprises have taken the lead in carrying out their overseas development strategies. Haier Group, a well-known local producer of home appliances, for one, has made successful inroads in some foreign markets, including the United States. The company soon established a good reputation abroad, and now ranks fourth in the global white goods industry, according to a study by Euromonitor, an authoritative industry consultant agency. Lenovo, the nation’s topnotch IT hardware producer, has also acquired the PC section of IBM, which should eventually buttress Lenovo’s branding efforts abroad, although the company has not fully leveraged the IBM name.
Often the journey to overseas expansion has been bumpy and filled with difficulties. Last year, China National Offshore Oil Corporation, or CNOOC, was barred from buying a stake in Unocal Oil Corp., as some people in the U.S. regarded the purchase as a threat to their energy security. Many more enterprises have been unsuccessful in their business endeavors abroad. They are either unfamiliar with local market conditions, or ineffectively compete with local rivals. Take Konka Corporation for instance. A couple of years ago, the TV manufacturing giant launched production facilities in Mexico, hoping it would grab some market share in the local HDTV industry. But due to heavy losses, it had to shut down the plant after only one-and-a-half years of operation.
While the root causes for these failed attempts may vary from case to case, some can roughly be identified. These include lack of understanding and experience in the local markets, a shortage of competent managerial personnel, clear-cut business development strategies, inefficient corporate governance and inflexibility amid intense competition in the marketplace. A growing number of Chinese enterprises are learning from these lessons, much to our delight, and more and more enterprises are preparing themselves for overseas business development. The government is also lending a helping hand, granting them preferential policies, and providing them with investment information and guidance. Chinese firms are already on their way overseas, but it will take a long time before they can fully carry out their global development strategies.

The final countdown

DEMOCRATS clearly hold the initiative as the US Congress returns from a month-long recess for the prelude to the ‘November battle’.
With President George Bush’s ratings at an unprecedented low, mounting concern over the Iraq debacle, unhappiness over the Republicans’ energy policy, worry about the soaring federal deficit, and precious little time left for lawmakers to pass legislation to appease unhappy voters, Democrats seem set to retake the House of Representatives and secure significant ground in the Senate.
It is pertinent to note that despite broadly backing the government as the so-called war on terror took centre stage in policy making, popular American opinion seems to have undergone considerable change, with the majority now expressing ‘concern’ about the direction the country is taking. This means, at the very least, that Republicans under Mr Bush have squandered much of the goodwill and public support they engineered and subsequently exploited in the wake of 9/11. Since this erosion has coincided with the US and its allies’ Middle East foreign policy (that formed the crux of the terror-war) falling apart, Democrats’ told-you-so and time-for-change claims have been significantly bolstered.
Should the Democrats claim the 15 House and six Senate seats needed to reclaim majorities, hearings and investigations into the Bush administration’s foreign, energy and military policies will not take long to follow, halting the president’s legislative agenda and effectively taking the wind out of his sails in the last two years of the presidency. Republicans’ brushing aside of predictions favouring Democrats is understandable, but there is little new in their rhetoric, so that too may backfire. As things stand, both on-ground sentiment and historical evidence tip the Democrats as winners (rare exceptions aside, party in power traditionally loses seats during the president’s sixth year). Either way, the decision is not far off, as the final countdown has begun.

—Khaleej Time