Private investors play bigger role overseas

Private companies accounted for nearly half of China's outbound investment in 2011, a senior trade official said on Thursday, while expecting the proportion to continue expanding as the government supports investors seeking overseas projects.

In 2011, China's outbound direct investment in the non-financial sector reached $68.58 billion, among which around 45 percent was from non-State-owned enterprises, said Shi Ziming, commercial counselor at the Department of Outward Investment and Economic Cooperation of the Ministry of Commerce.

Although SOEs still accounted for around 90 percent of China's cumulative ODI by the end of 2011, Shi was confident the private sector would play a bigger role.

"Private enterprises will definitely play a more and more important role in the process of the nation's outbound direct investment activities.

"They will probably surpass State-owned enterprises as the major force of China's investment wave," Shi said.

According to the top 100 non-financial Chinese companies ranked by ODI in 2011, Lenovo Group Ltd, Huawei Technologies Co Ltd, and Geely Holdings Group are the three largest private investors overseas, ranking 25th, 27th and 31st.

The report did not give the exact amount of overseas investment by each company.

These major private investors are also among the leaders in the latest ranking of the top 500 Chinese private companies by revenue, which was released on Thursday by the All-China Federation of Industry and Commerce.

According to the league table, in terms of revenue in 2011, Huawei took second place, Lenovo ranked fourth and Geely was sixth.

Jiangsu Shagang Group, China's largest private steelmaker, secured the top spot with annual revenue of 207.5 billion yuan ($32.7 billion) in 2011. It ranked fourth among overseas private investors.

Construction equipment maker Sany Heavy Industry Co Ltd, which gained a worldwide reputation earlier this year after it bought a 90 percent stake in German concrete pump manufacturer Putzmeister for 324 million euros ($407 million), was the fifth-largest overseas private investor and China's 10th largest private company.

The 500 largest private companies reported combined revenue of more than 9.3 trillion yuan in 2011.

In another league table complied by the Statistical Society for Foreign Economic Relations and Trade of China, which ranked China's top 500 private foreign traders, Huawei came top with an export-import volume of 11.7 billion yuan.

Huang Mengfu, chairman of the federation, said it has been a general trend for China's private companies to expand overseas.

"To become world-class enterprises, China's private companies should introduce more global talents and capital, and meanwhile respect local regulations and the environment," Huang said.

Ren Hongbin, a senior researcher with the Chinese Academy of International Trade and Economic Cooperation, said private companies with complementary advantages should expand overseas "in groups", in order to enhance the competitiveness and lower their risks in global operations.

According to the Ministry of Commerce, by the end of 2011, a total of 18,000 Chinese companies had made investments abroad, among them, 78 percent had made a profit or broke even, and 22 percent suffered losses.

"Many worry that State-owned enterprises' performance overseas is bad, but to be frank, it is much better than expected. Their business performance is fairly good, and it's not a concern," Shi said.

Out of the 2,000 institutions and branches set up abroad by Chinese SOEs, 73 percent made a profit or broke even, and only 27 percent suffered losses.

To help Chinese enterprises expand their horizons globally, the central government has taken a series of steps to encourage investors' participation in international projects.

The National Development and Reform Commission said this month applications will no longer need to be filed for overseas resource development projects with an investment worth less than $30 million.

In February, the nation's top economic planning agency gave approval powers for resource projects with an investment of up to $300 million, and non-resource projects with an investment of up to $100 million.