Chinese companies target expansion and acquisitions: A SPECIAL SERIES OF FINANCIAL TIMES REPORTS, ANALYSIS AND INTERVIEWS

Until recently, the prospect of a Chinese company buying the personal computer division of IBM would have been remote. The global dimension of China’s economic rise had previously been a flood of exports in one direction, and a surge of investment in the other, as the major international brands scrambled to position themselves in the world’s most dynamic market.

But as Lenovo’s acquisition showed so dramatically, Chinese businesses are themselves now building a global presence, whether through acquisition or investment .Last year, foreign investment by Chinese companies rose by almost one-third to US$3.6bn. This is still a fraction of the investment flowing into China. But the trend is gathering momentum.

The reasons are varied. Investment by energy and commodities companies, more than half of the total, is designed to secure stable supplies to feed voracious domestic customers. In consumer electronics, by contrast, the objective is frequently to secure technology and recognised global brands.

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Just as the sectors and the motives are varied, so are the targets – with investments ranging from Latin America to Australia and from the US to Europe. Recent state visits to Africa and Latin America have centred around investments and economic co-operation, underscoring political support for this global push. This in turn reflects the government’s desire to build a cohort of internationallycompetitive companies and to offset huge capital inflows into China.

Despite this determined drive, the policy faces significant obstacles. Political sensitivities, particularly in the US, a lack of experience in managing international operations and contrasting business cultures, all create complications.

There will, as a consequence, surely be mis-steps in China’s global push. But just as Korean and Japanese companies overcame scepticism to succeed abroad, so China's ambitions should be taken seriously.

This special report examines the forces behind China’s international expansion and the hurdles it needs to overcome. Based on research and analysis by the FT’s global network of specialist reporters and commentators, it provides the most authoritative assessment of China’s aspiring global champions.

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