[FOUNTAIN]China’s new investment policy focus

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[FOUNTAIN]China’s new investment policy focus

“Going out” is the latest buzzword referring to China’s business strategy of making investments abroad. It’s the opposite idea of “inviting in,” or attracting foreign direct investment to China.
The tactic came into the spotlight in 2001, when former President Jiang Zemin first mentioned the idea. It became an official national strategy at a seminar hosted by the Ministry of Foreign Trade and Economic Cooperation in September 2002. Beijing, which had strictly controlled the outflow of its capital, drastically changed its policy direction. By acquiring businesses abroad or arranging financial partnerships, Beijing hoped to secure internationally competitive technology, facilities and distribution networks.
The Chinese government has actively encouraged the overseas expansion of state-run corporate giants. Lanxing Group, which plans to acquire Ssangyong Motor, is a producer of petrochemical products and military vehicles under the direct management of the central government.
Chinese companies have already acquired or invested in major electronics companies in France and Germany. They are now reaching out to the automobile industry. There are rumors that Chinese companies are pursuing full-scale mergers and acquisitions in Japan. Korean companies are prey as well.
Chinese capital invested abroad totals around $10 billion. But the “going out” policy could prompt explosive growth in a short period of time.
Many Koreans still reject the fact that Chinese companies are buying Korean businesses. They say American capital is too aggressive and imperialistic, and Japanese capital is unacceptable because of the historical antagonism. They are concerned that we might lose the technological edge to China.
No one is saying that Chinese capital might actually be beneficial to our economy if used well. Maybe ethnic sentiment is overriding the country’s actual interests.
When China is acquiring foreign companies through a government-led campaign, our rejection might not be enough. If China begins to purchase companies in developed countries more advanced than Korea is, we might not be able to maintain our edge. In the world of business, there is no such thing as “investment capital with dignity.”


by Nahm Yoon-ho

The writer is a deputy city news editor of the JoongAng Ilbo.
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