By Lan Lan (China Daily)
Updated: 2011-04-28 09:06
Survey: Sharp rise in firms planning more spending in foreign markets
BEIJING – Almost 90 percent of domestic companies involved in international trade plan to increase overseas investment, a survey reveals.
Of the 1,024 companies surveyed, about 88 percent said they want to boost investment overseas over the next two to five years, a sharp rise from a year earlier when 61 percent of the firms surveyed said they planned to expand investment.
China’s foreign exchange reserves, the world’s largest, hit $3.04 trillion at the end of March.
Asia, Europe and North America will be prime destinations for investment and Africa is gaining increasing importance as 22 percent of the companies surveyed had already invested there.
In the next two to five years, about 30 percent of the companies surveyed expect to invest more than $5 million.
In addition to traditional investment models, such as building plants or upgrading existing facilities, a growing number of companies are looking at mergers and acquisitions.
Chinese investment overseas through mergers and acquisitions in 2010 was worth $23.8 billion, accounting for 40 percent of total investment.
“High-tech and clean energy technology companies are becoming hot targets for overseas mergers and acquisitions,” said Xu Weiqing, an analyst with Zero2IPO Group, a capital market research company.
China has become the world’s second-largest acquirer of foreign companies, only next to the United States, according to a recent research by the Chinese Academy of Social Sciences.
But a lack of diversified fundraising channels also restricts investment overseas, the survey showed.
“Fundraising difficulties and lack of international operation experience are major limitations for Chinese companies hoping to expand overseas, especially for small- and medium-sized enterprises,” said survey project director Jia Huai
Using the companies’ own capital and borrowing from banks are the two main channels for overseas investment. Other financing channels such as stocks, securities and other market instruments are not widely used, Jia said.
