Survey on Chinese Enterprises’ Outbound Investment and Operation (III)

I. Impact of domestic policies and environment

1.1 Obvious helping effect of going global government policy on enterprises

Based on the survey， 72.8% enterprises said that they had obtained various kinds and degrees of assistance from domestic governments at various levels.

Among all the going polices， foreign exchange policy， customs inspection policy， rights and interests protection policy， fiscal policy， insurance policy， industry-oriented policy， financial policy and information services were evaluated by enterprises as the most helpful to their going global efforts (Figure 1). These 8 policies， according to more than 60% enterprises， are very helpful to their going global. Among them， overseas investment information dissemination (government investment guide)， exchange policy support (simplifying the review of foreign investment source)， custom inspection support policy (simplifying procedures for project approval and personnelassigning formalities)， overseas rights and interests’ protection policy (foreign service personnel security measures) won the recognition of over two-thirds enterprises.

In terms of impact of external environmental factors at home on foreign direct investment decisions， the going global policy and relevant preferential terms have a significant impact on more than 75% of the enterprises. Meanwhile， rising labor costs， low domestic demand and difficulties in acquiring domestic financing have a considerable impact on the foreign investment decisions of about 50% of the enterprises. A comparison between going global policies relevant preferential terms and other market environment factors show that presently， the going global policy and relevant preferential terms have obvious effects in promoting and guiding the going global of the enterprises.

Among the five factors with greatest impact on foreign direct investment decision listed by enterprises， lack of international business personnel and multinational experience rank the highest. Among other operational self-factors， management’s prudential attitude towards overseas investment and uncompetitive nature of products of enterprises also have important impacts on their FDI decisions. Political consideration is relatively an unimportant factor in the FDI decisions of the enterprises， which shows that the enterprises give more consideration to operation-related factors when making investment decision.

1.2 Going global policy is more helpful for state-owned firms than private firms

As mentioned above， 72.8% enterprises surveyed had obtained various kinds and degrees of assistance from governments at various levels during their going global process， such proportion differs for enterprises with different ownership. Figure 4 shows， 83.1% stateowned firms obtained various forms of assistance in varying degrees from governments at various levels during their going global process， while such proportion is 70.1% in private firms， 13% lower than state-owned firms.

In terms of specific assistance provided by the going global policy to the foreign direct investment of enterprises， there are also differences between stateowned and private firms. As shown by Figure 5， state-owned firms obtained more assistance than private firms in terms of fiscal policy support， industryoriented policy and insurance policy support. Meanwhile， policy assistance obtained by private firms center more on customs inspection policy support and protecting rights and interests overseas. By comparing the emphases of different policies， it’s easy to see that most of policy supports obtained by state-owned firms are “preferential ones”. This shows that state-owned firms not only obtain a higher proportion of policy support， but the support policies they obtained are also preferential in substance.

The difference between external environmental factors on the FDI decisions of state-owned and private firms shows Figure 6: the impact of rising labor cost in China on state-owned and private firms is similar. FDI decisions of private firms are more subject to the impact of low domestic demand and difficulty in domestic financing. This shows that state-owned firms have certain monopoly advantages in the domestic market and greater advantages over private firms in terms of financing.

Regarding self-factors affecting FDI decisions， a higher proportion of state-owned firms disclosed that they lack international business professionals and multinational experience. With respect to measuring the prudent attitude towards foreign investment， more private firms stated that they were prudent. When it comes to international competitiveness of products and technologies were still uncompetitive. As for political considerations behind investment， the answers of state-owned and private firms were similar， which shows that it is groundless for some international organizations to question the motivation of overseas investment of Chinese stateowned firms.

II. Impact of policies and

environment of host countries

2.1 Impact of policies and investment environment of host countries is obvious

Among the economic， political， legal， social， cultural and other environmental factors of the host countries， in the opinion of the enterprises， the major factors affecting their investment decisions are: market potential of the investment location， law and intellectual property protection， natural resources， political risk， transportation cost advantages， quality of labor， labor costs， etc.

2.2 General investment environment of the host countries and their attitudes towards Chinese enterprises

With respect to the general investment environment， most enterprises think that the investment environment of the host countries is favorable. For example， over 80% enterprises going global believe the host countries do a good or relatively good job in terms of better private property protection， actual implementation of laws and regulations， fair settlement of commercial disputes， complete infrastructures， curbing corruptions and others. High praise on the investment environment of host countries shows that the investment environment there has basically reached the expectation of domestic enterprises going global and laid a favorable basis for their long-term development.

Figure 9 shows that how host country treats Chinese enterprises or how Chinese enterprises appraise the investment environment: 83.6% enterprises said that host country would not equate Chinese enterprises’ investment with government actions; 83.6% expressed that the host country provided Chinese-invested enterprises with many preferential conditions; 81.1% thought that the host countries were not biased towards Chinese-invested enterprises; and even 73.2% said the host countries often emphasized the positive role of Chinese-invested enterprises. Based on the above investigation results， the investment environment of the host countries can be deemed friendly and fair to most enterprises going global.

Answers of the enterprises surveyed to the question whether they have obtained assistance from governmental departments of host countries in the course of investment Figure 10 show: 56.7% Chinese enterprises obtained assistance from host countries in their going global process; 68.3% state-owned firms said that they obtained help from governmental departments of host countries， higher than 54.4% reported by private enterprises.

2.3 Great difference between general investment environment of Europe North America and Africa， but similar attitudes towards Chineseinvested enterprises

As we all know， the investment environment differs greatly in Europe North America and Africa. Data from Figure 11 reveals the general investment environment of Europe North America is obviously better than that of Africa. As for the attitudes of host countries towards Chinese-invested enterprises， there is no distinctive difference between Europe North America and Africa. For example， with regards to “emphasize the positive role of Chinese-invested enterprises” and “not biased towards Chinese-invested enterprises”， there is no distinctive difference between Europe North America and African countries. 72% enterprises that invest in Europe North America recognize that “host countries provide Chinese-invested enterprises with many favorable conditions” which is higher than 64% reported by Chinese investors in Africa. As for “host countries will not equate Chinese enterprises’ investment with government action”， 94.3% enterprises that invest in America reported. In all， data proves that most host countries invested by Chinese enterprises going global are friendly and fair towards Chinese-invested enterprises.