Firms urged to invest in US

By Liang Fei in Boao Source:Global Times Published: 2013-4-8 23:23:01

By Chinese companies should not hold back on investing in the US because of several controversial deals that did not work out, executives said Monday in a session on China's overseas mergers and acquisitions at the Boao Forum for Asia 2013.

Chinese companies invested a total of $77 billion overseas in 2012, but only $6 billion of that went to the US, according to Dominic Ng, chairman of US-based East West Bank. "The US is China's major trade partner … it makes sense to have a lot more Chinese investment in the US," he said.

Margery Kraus, CEO of US consultancy APCO Worldwide, said Chinese investors should not be put off by the controversial failure of some earlier deals in the US. She said that nearly 70 percent of Chinese companies have reported a positive experience from their investment in the US, citing data from a survey carried out by her company.

Zhang Hongli, vice president of Industrial and Commercial Bank of China, said that the investment by Chinese firms in the US is still small, especially compared to the scale of trade between the two countries.

"ICBC in general has had good experiences in investing in the US, including our acquisition of the US branch of the Bank of East Asia," said Zhang.

Some Chinese companies have experienced difficulties when investing in the US, creating concerns for other Chinese entrepreneurs.

Several investment deals involving Chinese telecom equipment manufacturers ZTE and Huawei were shelved after US regulatory authorities said they might pose a "threat" to US national security.

Companies in other sectors, such as machinery maker Sany Heavy Industry, also claimed that they have been treated unfairly in the US.

"Sometimes the 'hard times' were not because of the government, but their rival firms," Kraus told the Global Times on the sidelines of the session, saying that other sectors such as manufacturing and services still welcome Chinese investment.

Dominic Ng of East West Bank said that Chinese companies have missed many "golden opportunities" to invest in the US, especially in the period between 2008 and 2011, when prices were very low. The US government has also been "receptive" toward Chinese investment, Ng noted.

China's outbound investment rose by 14 percent to $77 billion in 2012, with Western Europe and the US being the main destinations, said Nick Lord, senior editor at Finance Asia magazine, who was also the host of the session.

Lord also noted that around 45 percent of China's outbound investment has gone to the resources sector.

"State-owned companies will still focus (on the resources sector), but investment by China's private sector will be much more diversified in the future," Georges Ugeux, chairman of Galileo Global Advisors, told the Global Times on the sidelines of the session.

Speakers at the session also noted that a lack of sufficient preparation and poor cultural integration were major reasons behind the failure of overseas acquisitions.

Reporters rush to interview experts who attended a meeting Monday with the theme of food security at the Boao Forum for Asia. Photo: CFP
Reporters rush to interview experts who attended a meeting Monday with the theme of food security at the Boao Forum for Asia. Photo: CFP



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