Investors take longer view on going global
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Although the global investment environment is improving, Chinese investors are still very prudent and are unlikely to spend large amounts overseas in the short term, according to a report by the China Council for the Promotion of International Trade (CCPIT).
The report, due to be published on Tuesday, said that 26 percent of corporate interviewees had plans to invest overseas in the next 12 months, while 30 percent said they had no plans to do so.
Their outlook was more bullish in the medium term, with 61 percent of companies saying that they would increase their overseas investment over the next two to five years.
But the investment volume is unlikely to be large, with 33 percent predicting they will inject funds of less than $1 million in the medium-term, and 36 percent planning to invest between $1 million and $5 million.
"The financial crisis provided good opportunities for Chinese investors as acquisition costs were much lower than before," said Song Hong, director of the International Trade Research Institute at the Chinese Academy of Social Sciences.
Despite the global economic tsunami, China's outbound direct investment in non-financial sectors surged 6.5 percent from a year earlier to $43.3 billion in 2009.
High-level officials from the Ministry of Commerce said China's overseas direct investment may witness double-digit growth this year to around $60 billion.
From a long-term view, the prospects for China's overseas investment are promising, said analysts.
The CCPIT report said 31 percent of corporate interviewees said the financial crisis "exerted severe influence" on their investment overseas in 2009, which compares with 40 percent in the previous year.
"The most difficult time for local enterprises aspiring to expand abroad is over," it said.
Privately owned automaker Zhejiang Geely Holding Group recently signed a deal with Ford Motor Co to acquire the Volvo car unit for nearly $1.8 billion.
"China has a large volume of foreign exchange reserves, the nation's economic growth is the highest worldwide and the global markets are recovering, all of which is helping boost China's ODI," said Song.
And the expectable revaluation of the Chinese currency late this year will be another stimulus, said Yan Jinny, an economist with Standard Chartered Bank in Shanghai.
A large proportion of Chinese investment went to manufacturing, especially machinery and textiles, said the report.
The report also showed the United States absorbs the largest volume of investment from China, with 29 percent of interviewees establishing a presence there. Asia, Europe and North America were the top three markets that Chinese investors targeted.
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