The first-ever survey of the foreign assets held by large Chinese multinational enterprises (MNEs), conducted by the School of Management at Fudan University and the Vale Columbia Center on Sustainable International Investment (VCC), released today, indicates that Chinese multinationals are making steady progress on the world stage.
The survey’s principal findings include: As of the end of 2006, 18 large Chinese MNEs in terms of foreign assets had at least US$79bn in overseas assets (table 1), employed over 120,000 persons abroad, and had US$79bn in sales by their foreign affiliates (annex table 1). State-controlled MNEs, such as China National Petroleum Corp. and Shanghai Automotive Industry Corporation (Group), are being more proactive international players, as are majority-owned private firms Lenovo and TCL.
The Chinese government, through its principle of both “bringing in” and “going out”, has encouraged the international expansion of Chinese MNEs since the beginning of this decade as a springboard to acquire strategic resources, expand into foreign markets, and reduce market constraints at home. These 18 –which are large but not necessarily the largest 18 Chinese MNEs (see footnote a in table 1) –have played a vital role in that expansion, helping make China the fourth largest outward investor among emerging markets in 2006 in terms of FDI outflows and the seventh largest in terms of outward FDI stock.
“Chinese firms have made great progress in their internationalization in recent years. What is particularly important to note, however, is that now the driving force for internationalization comes from the enterprises themselves rather than the government”, notes Xiongwen Lu, Dean of the School of Management at Fudan University. “Still, most Chinese MNEs are not yet as diversified in their internationalization strategies as are their BRIC counterparts.”
Adds Karl P. Sauvant, Executive Director of the Vale Columbia Center on Sustainable International Investment, “Chinese MNEs started acquiring foreign assets later than their BRIC counterparts, but they are rapidly making up for lost time. At their current rate, it may not be long before China is the preeminent outward investor among all emerging markets.”
The School of Management at Fudan University (one of the most influential business schools in China) and the Vale Columbia Center on Sustainable International Investment (a joint Columbia Law School – Earth Institute center at Columbia University) collaborated on the ranking of Chinese MNEs. This exercise is part of a global effort to rank emerging market MNEs. Ranking lists for Brazil, Russia, Slovenia and Israel have already been published (see www.vcc.columbia.edu). A ra Slovenia and Israel have already been published (see www.vcc.columbia.edu). A ra