Co-sponsored by the Ministry of Commerce(MOFCOM) and United Nations Conference on Trade and Development (UNCTAD) and organized by China Group Company Promotion Association and Chinese Academy of International Trade and Economic Cooperation of the Ministry of Commerce, the International Forum on Chinese Companies Going Global was held in Beijing on April 26. The theme of the Forum was "Cross-Border Investment, Mutual Benefit and Win-Win Outcome". Leaders of UNCTAD, MOFCOM, the Ministry of Foreign Affairs, the Ministry of Finance and the State Administration of Foreign Exchange attended and addressed the Forum. Senior managers of some big Chinese companies and well-known multinational companies shared with the delegates their cross-border business strategies and management experiences during the Forum.

Mr. Chen Jian, Assistant Minister of Commerce delivered a speech at the Forum titled "Make Cross-Border Investment, and Promote Mutual Benefit and Win-Win Outcome". The following is the full text of his speech:　

Distinguished guests, ladies and gentlemen:

The International Forum on Chinese Companies Going Global is cosponsored by the Ministry of Commerce (MOFCOM) and UNCTAD. On behalf of MOFCOM, Let me express my warm welcome to all the distinguished guests and friends from home and abroad, and my sincere thanks to all the people from governmental departments, and the academia and business circles, who kindly support and attend this Forum. The theme of this Forum, the third one of the kind China has held, is "Cross-Border Investment, Mutual Benefit and Win-Win Outcome". I hope all the Chinese and international delegates can have in-depth discussion on key issues concerning cross-border direct investment and merger and acquisition with a view to encouraging Chinese companies to make greater efforts in investing and running business abroad.

It is well known that the gradual deepening of economic globalization brings about closer ties among all countries. Enhancing international cooperation, making use of the advantages of each other, and realizing common development are not only the sincere wishes of all countries and regions, but also their only choice in order to seize opportunities and face with challenges. Peace, development and cooperation are becoming the common pursuit of most countries and regions in the world.

In 2005, the world economy maintained a momentum of faster growth of 3.2%. World trade kept increasing at a rate of 6.5%, and 15% for trade in goods. Cross-border direct investment started to increase again to US$895 billion, up by 29% over 2004. UK ranked No.1 in the world with US$219 billion of FDI inflow, followed by the US with US$106 billion, and China with US$60.3 billion. Cross-border FDI has showed some new tendencies:

1, Multinational IT companies are adjusting their location of global production and R&D centers.

2, The growth of developing countries in attracting foreign investment, particularly Asian and East European countries and Russia, is becoming an important driving force for cross-border investment.

3, Cross-border investment in service and resource-oriented industries is holding the limelight.

4, Cross-border investment in developed countries recovered its rapid growth. Their FDI inflow in 2005 increased by 38% year on year.

5, While merger and acquisition continue to be the main form for the flow of FDI in recent years, strategic alliance or franchising and other non-equity investment is becoming important means of investment.

6, Bilateral, regional and multilateral investment agreements witnessed a continuous development.

At the same time, China's foreign trade and economic cooperation maintained a rapid growth. In 2005, China’s total trade volume exceeded US$1.4 trillion, up by 23.2%. The actual FDI inflow reached US$60.3 billion, and 44,000 new foreign investment enterprises were approved. Chinese overseas investment hit US$6.9 billion, up by 26%, among which US$2.3 billion were invested abroad through merger and acquisition, accounting for 56% of China’s total overseas investment. The rapid development of China's foreign trade and FDI inflow, as well as the fast expansion of market capacity have not only pushed forward the economic and social development of China, but also contributed positively to global industrial restructuring and rational distribution of production factors. Currently for more than 2/5 multinational companies, the profit margin of their China businesses is higher than their global average.

Ladies and gentlemen:

Since 2004, the global economy has been experiencing a period of high-speed growth. According to a forecast made by IMF, the world economy will keep an annual growth of 4.3% from 2006 to 2010. The international division of labor becomes more specified, and world trade continues to grow at a higher speed than that of global production. International industries are shifting to the high end, and hi-tech industries and modern service industry in developed countries are moving overseas at a quicker pace. Most investment experts foresee a better prospect of FDI inflow into the Asian and Pacific region, particularly in such key sectors as banking, insurance, commercial service, tourism, transportation, information and related industries, retail and wholesale. Big companies from the US, Japan and Europe will generate another tide of merger and acquisition. Nonetheless, world trade and investment are also faced with new risks, such as high oil price, the negative impact of SARS on agricultural trade, escalated trade protectionism, rising global interest rate that adversely affecting cross-border investment, trade and financing, international political vicissitude, outstanding security problems as a result of traditional and nontraditional factors, and frequent global conflicts.

It is quite obvious that the international political relation will embrace not only opportunities but also challenges in the future. We should resolutely seize the key opportunities brought about by the new round of global production factors reorganization and industry transfer to foster strengths and circumvent weaknesses, and push forward the global economic growth and common prosperity. Different civilizations, social systems and development roads in the world should all be respected, which will be improved by borrowing others’ strong points in the process of competition. Ultimately common development, prosperity and happiness for the whole world will be achieved on the basis of common ground built by means of cooperation and putting aside differences.

I hope that all distinguished guests and delegates could fully express your opinions at the Forum and share your experiences in cross-border investment, especially cross-border merger and acquisition, so that we can enhance mutual trust based on deeper understanding, which will then benefit further cooperation in both width and depth between China and the rest of the world.

Chinese companies are making rapid strides in overseas investment, and cross-border merger and acquisition. However, compared with China’s FDI inflow, the size of its overseas investment is rather small. There are a great number of subjects we need to think about and study, which include:

1, Different practices in the international and domestic market should be fully noted, and attention should be paid to pooling up the advantageous resources.

2, The internal and external opportunities in the process of cross-border merger and acquisition should be firmly seized to lower the business risks and obtain the maximum economic interests.

3. We should study and apply international financing instruments and methodologies to lower the risks and costs of merger and acquisition;

4, Chinese companies should improve their ability in running international businesses by having control of core production and operational resources, fostering a group of human talents familiar with international business rules, laws and regulations, and different human environment.

5, The principle of “Make easy steps first and difficult ones later to steadily push ahead China’s overseas investment” should be followed when engaging in international merger and acquisition.

I hope that Chinese companies and institutions can make full use of this Forum, and be modest in learning the good experiences of their counterparts in merger and acquisition, so as to perform better in this area and contribute to the economic development and social prosperity of China and the whole world at large

I wish the Forum a great success!

(Source: Network Center of MOFCOM)