State-owned enterprises urged to expand overseas

China's overseas investment has risen sharply in recent years. And as the country pushes ahead with its "Go-Out" strategy, State Owned Enterprises are being urged to expand outward investment further.

"China's state owned enterprises should continue to seek business opportunities in various sectors worldwide", Chen Yuan, the newly appointed chairman of Chinese Enterprise Investment Association made the remark at its high-level council meeting in the Great Hall of People, adding that domestic companies need to further expand investment overseas.

Chen Yuan said,"As well as attracting inward foreign investment, domestic enterprises should focus more on expanding outward foreign investment, and speed up transformation of outward investment models."

With a foreign reserve of more than 3 trillion dollars in hand, China's "Go Out" strategy has been given high priority by the country's ruling Communist Party. At the recently concluded National Party Congress, president Hu Jintao said in the country's overall development plan that China should encourage domestic companies to increase the pace of outbound investments.

The direction they are headed, is seeing some shifts.

Chen Yuan said,"SOEs' outbound investment continues to be the mainstream of China's investment overseas. Energy sector such as mining and electricity remain as the focus. Telecommunication, petrochemical and machinery manufacturing are also popular sectors. And while we keep working with China's traditional trading partners such as US, Europe and Japan, more SOEs will be turning to emerging markets in Asia, Latin-America and Africa, investing in service and business sectors, as well as energy and resource fields."

China's Outbound Direct Investment increased to more than 74 billion dollars in 2011, making it the world's 6th largest investing country.

SOEs however, have encountered many obstacles in meeting their overseas plans. Foreign governments for instance, have on several occasions blocked proposals on national security concerns. Reported loss was also linked to a lack of knowledge about foreign markets, poor management and insufficient number of qualified workers.

But despite the challenges, Chinese SOEs continue to show strong commercial motivation, and many of them are operating in a manner similar to international companies.

China's emergence as a major force in the international investment arena has caused some anxiety in the world's capitals. But the country has made it clear that this will be a major trend for the years to come. And as China's state-own enterprises seek business opportunities worldwide, they are also urged to be responsible corporations in foreign countries.