The mainland's small and medium-sized enterprises, which make up about 98 per cent of businesses in the country, are becoming more aggressive in investing abroad, putting their expansion efforts on a fast track. "Over the past one to two years, a lot of Chinese SMEs have increased their investments overseas," said Zhang Gaobo, the founding partner and chief executive at financial services group Oriental Patron, at the Power Dialogue segment of the South China Morning Post 's China Conference in Hong Kong on Monday. Zhang expected this trend to continue, with more SMEs learning to be as savvy as larger Chinese enterprises in using mergers and acquisitions, as well as joint ventures to significantly grow their operations. With the participation of more SMEs, Chinese outbound foreign direct investments were expected to ramp up in the United States and the European Union member states over the next few years. Chinese companies spent nearly US$46 billion in the US on new businesses and acquisitions from 2000 to last year, according to data from research firm Rhodium Group. Strong protection of intellectual property rights, a large talent pool and so-called innovation clusters, such as California's Silicon Valley, were the major draws in the US for Chinese companies, according to a report by the research firm. It said Chinese companies "now spend hundreds of millions of dollars every year on research and development activities in the US" and also provide new financing sources for US start-ups. Annual investment by Chinese companies in EU member states soared to €14 billion (US$15.4 billion) last year from virtually zero in 2000, according to a separate report on Chinese outbound foreign direct investments in Europe by Rhodium researchers Thilo Hanemann and Miko Huotari. Germany's advanced manufacturing capabilities were the biggest attraction for Chinese investors as automotive and industrial equipment accounted for more than 65 per cent of total Chinese investment since 2000. In recent years, the industry mix for those investments broadened to include information technology equipment, finance and business services, as well as consumer products. Tong Mao, a lawyer specialising in cross-border acquisitions at Squire Patton Boggs in Beijing, said on Monday that Chinese SMEs would increasingly need the advice of experts to help them navigate regulatory and legal minefields in overseas markets. Tong cited as an example the trouble encountered by Huawei Technologies, China's biggest manufacturer of telecommunications equipment, when it sought to acquire companies in the US over the last decade. Huawei had to withdraw from a US$2.2 billion deal in 2007 to take over US networking equipment maker 3Com and a US$2 million purchase of technology firm 3Leaf Systems in 2010. Tong said Huawei had failed to notify the proper authority about its acquisitions. Those deals fell within the purview of the Committee on Foreign Investment in the US. The inter-agency body assesses the national security implications of mergers, acquisitions and takeovers that could result in foreign control of any US business. Both Zhang and Tong said they expected Hong Kong to provide more Chinese SMEs with valuable support in legal infrastructure, financing and potential partnerships to pursue strategic international investments.