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China should accelerate the legislation dealing with overseas investments by Chinese companies, as an increasing number of domestic companies extend their global footprints, a national legislator has said.
Nurturing domestic multinational corporations should be a "national strategy", and the government should provide a one-stop shop service to facilitate international expansion, said Ge Junjie, vice-president of Bright Food Group Co and a deputy to this year's session of the National People's Congress from Shanghai.
"An overseas investment law can serve as the legal framework for Chinese companies to enter the world stage, protect overseas assets and ensure sustainable growth," said Ge.
He also suggested that the country should allocate funds from its more than $3 trillion in foreign exchange reserves to bolster the international expansion of Chinese firms.
Beyond the headlines about China's growing global clout, Ge said he believes that the establishment of world-class domestic firms is lagging behind the overall growth of the domestic economy.
This puts China at a disadvantage in international labor division matters, which leads to limited bargaining power at industry-wide talks.
Ge said that there is a spontaneous drive for Chinese companies to go beyond borders, as international costs for obtaining resources and financing keep dropping, while a high-level of work efficiency remains in place.
"In the past 30 years, China has been producing for the world. It is time to make the rest of the world produce for China," he said.
An important way to go global is through mergers and acquisitions. Ge's company - the country's second-largest food company - completed four major international buyouts in the past two years.
The deals are an example of Bright Food's attempts to cater to China's growing middle class, which seeks higher-quality products and Western-style food, and help the company boost overseas sales to as much as 30 percent of its total sales in five years.
The maker of dairy, sugar and wine products is currently in talks with potential partners for acquisitions, Ge noted.
But he said he believes that the lack of proper guidance from the government will pose severe challenges to the company's overseas ambitions.
"When we first attempted to acquire Manassen Foods, the Australian food distributor, we had to search from scratch for local tax, financing and investment policies," he said.
To increase the number of China's equivalents of Coca-Cola, McDonald's or Walmart requires not only great financial resources, but also management experienced in international operations, high technology, branding skills and many other attributes, he noted. None can be acquired in a short period of time.
And since many Chinese firms are seeking global operations, Ge suggested that aside from the overseas investment law, the government should set up a public service platform to offer investment policy briefings and guidance about industry trends, as well as measures for risk control.
The move would help address common needs from companies and maximize their global potential, he added.
Zhang Zhao'an, an economist, said he believes that such a law is essential to determine the course of Chinese firms' overseas expansion.
"With such a law, we would build the foundations for Chinese strength and influence, and shape an international strategy capable of overcoming the challenges for going global," he said.
A recent study released by Fortune magazine showed that Chinese companies are struggling to translate their economic might into global reputations.
Not a single Chinese company was ranked in the top 50 in the magazine's annual "World's Most Admired Companies List" for 2013, which is widely considered among the most definitive report cards on global corporate reputation.
(China Daily 03/05/2013 page17)