Chinese hungry for overseas expansion
Despite the prevailing global uncertainty, Chinese corporates are hungry to expand overseas, and that could be good news for Irish companies. About four out of every five international Chinese corporates plan to expand further overseas, a survey by HSBC found.
The vast majority of respondents, 83 per cent, said they intend to further expand offshore. Among them, 58 per cent plan to expand existing overseas operations while 47 per cent plan to increase their number of entities abroad, the survey of more than 200 companies found.
“As the global economic landscape in regions such as North America and Europe shifts, many industries have turned to China as a key market to generate growth and lead the economic recovery,” said Noel Quinn, head of commercial banking for HSBC Asia Pacific.
The main motivations for Chinese companies heading into foreign markets are the ease of trade (69 per cent) and to expand their network (59 per cent).
With Chinese companies attaching more importance to brand-building in recent years, 46 per cent of those interviewed were driven by a desire to improve their brand image.
Half of those interviewed said price was still their key advantage, with the findings also pointing to their solid financial strength (40 per cent) and their advanced technology and production lines (40 per cent) as major competitive advantages.
At the same time, the survey revealed that Asia remains the major investment focus among outbound Chinese enterprises (85 per cent). The overseas markets within greater China (Hong Kong, Macau and Taiwan) were identified as the favoured destinations to set up overseas entities (71 per cent).
Investment in traditional markets such as North America (24 per cent) and Europe (22 per cent) was driven by market potential as well as research and development and advanced technology.
“Despite the overall positive outlook, challenges remain for Chinese companies’ foreign expansion, including economic slowdown overseas, foreign exchange fluctuation and local competition,” said Li Zhen, head of HSBC’s China Outbound operation.