Recruiting in China

Privately owned Chinese enterprises are set to become the new force among China's overseas investors.

So said Hou Zhirui, an official from the All-China Federation of Industry and Commerce, based on data from an eight-year period.

The organization's statistics showed that the growth rate of private enterprises has seen more of them become large companies with sales volumes of 300 million yuan. And these firms will be ready to go abroad when they reach a certain level.

"It will not take a long time (for Chinese private enterprises to become a new force in overseas investment). Maybe only three to five years," he said.

A large number of private Chinese firms have already increased their presence in overseas markets.

Outbound investment includes overseas processing, technology and equipment exports, establishing sales channels, and mergers and acquisitions. But most of the firms still focus on small-scale projects.

The federation's Zheng Yuewen said the Chinese government should remove restrictions on private enterprises "going out".

He said the government should, for example, remove the approval process for outbound investment.

The outbound investment of Chinese firms totaled $16.1 billion last year, according to statistics from the commerce ministry. China went from being the 17th largest investor in the world to the 13th in 2005.

Although the figure reflects a 31 percent increase from a year earlier, it is still small compared with the $64.5 billion of foreign investment China attracted last year.

Chinese overseas investors are facing major obstacles such as a lack of core technologies, cultural differences and a lack of well-known brands, according to a report on Chinese transnational corporations by the Research Institute under China's commerce ministry.

"But enterprises cannot go out until everything is ready," said Wang Zhile, a researcher with the institute.

The report suggested the Chinese government should offer more policy support to Chinese enterprises for their overseas investments, quoting the successful experience of South Korean companies.

"Only by cultivating a large number of Chinese transnational companies can the country concentrate its limited resources to lay a solid foundation for economic strength," the report said.

Meanwhile, the report said Chinese enterprises must improve their abilities in overseas investment and management.

"Chinese investors must learn how to shun trade obstacles such as safeguards, tariff barriers and trade conflicts brought by foreign countries," it said.