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3. The improvement of international competitive capacity of SOEs. China today not only makes great efforts to “Attracting Foreign Investment”, but also attaches great importance to the strategy of “Going Global”. China intends to sharpen more SOEs into competitive multinationals such as Haier and Lenovo. Undoubtedly, the input of FDI may be a short cut to attain international reputation and absorb international business experience.
The Promising Perspective:
Looking into the future, we shall hold confidence in the performance of FDI in the transformation of SOEs:
1．The amount of potential FDI is enormous. China ranks the first in attracting foreign investment in the developing countries for consecutive years. According to the statistics, however, more than 70% of the investments are made in terms of traditional methods such as establishing WFOEs or JVs. Thus, the capital amount which can be admitted after the relaxation of the limitation will be amazing.
2．The participation of FDI appears fruitful. SOEs, especially those large and media size ones, generally enjoy mature distribution system and some kind of local reputation. It is more readily to gain market shares through the Merger and Acquisition of SOEs than tapping market by new enterprises. Benefits are foreseeable on the basis of preferential conditions and favorable investment environment.
3．The investment scope for FDI is expending. It has been confirmed by official documents that more scopes will be tentatively opened to FDI while more room will be left to investors for consideration.
Former President Deng Xiaoping’s referred the transformation of SOEs as “crossing the river by feeling the stones under one’s feet”. After over two decades experimental approach based on trial and errors, the Chinese reform of SOEs has made remarkable progress. The input of FDI, a new positive attempt, had a cherished beginning and will be bound to play a more important role in the coming future.
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