INVESTING

The right investment approach depends on the business goal, experts say

Mainland Chinese companies are advised to adopt varied strategies when doing overseas investment

PUBLISHED : Monday, 02 November, 2015, 7:13pm
UPDATED : Monday, 02 November, 2015, 7:16pm

Mainland Chinese companies are advised to adopt varied strategies when doing overseas investment, while leveraging Hong Kong to act as an unique financial platform, industry insiders said Monday.

Speaking at the South China Morning Post China Conference in Hong Kong, Zhang Gaobo, founding partner and CEO of Oriental Patron Financial Group, said China’s outbound direct investment was likely to surpass foreign direct investment within this year.

Mainland companies, he said, can be summarised into two main forms of demand. Big companies

“There are two kinds of demand from mainland-based companies. And it is good for them to follow different strategies in terms of outbound investment,” Zhang said.

One kind is from big manufacturers looking for better brands, tech and sales channels overseas in developed markets like North America and the Europe. It would be challenging to integrate into local management and culture. So it is better for them to set up joint ventures with local companies, without seeking a controlling stake.

“It is good for them to follow different strategies in terms of outbound investment,” Zhang said.

Infrastructure-related companies who are after investment opportunities in markets included in China’s “On Belt, One Road” initiative should pursue structures that provide outright control, Zhang said.

Mao Tong, an attorney with Squire Patton Boggs, said Hong Kong should leverage its advanced administrative culture.

“Hong Kong is at the beginning of the road, and beginning of the belt,” he said.

“Talents from Hong Kong can offer financial solutions, technology, and can help to build regulations and standards in this process.”

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