Summary of Chinese Investment in Developed Markets

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8

Qualities

  • Comprehensive
  • Innovative

Recommendation

A number of conspicuous acquisitions, including the Waldorf Astoria Hotel in New York and auto manufacturer Volvo, give the impression that the Chinese are soaking up companies in the West at a rabid pace. But the reality is more nuanced, as this discerning report from the Economist Intelligence Unit reveals. While China’s overseas direct investment is likely to grow, its businesses face significant hurdles in their forays into developed markets. getAbstract recommends this smart study to investment bankers, corporate executives and investors.

About the Author

The Economist Intelligence Unit is an independent research and analysis organization.

 

Summary

China is intensifying overseas direct investment (ODI) into developed markets. Until 2004, China’s ODI activity was minimal. In 2014, China’s investments in America surpassed US firms’ deals in China for the first time, and estimates predicted that that year’s total ODI would top $120 billion. Yet Chinese ODI portfolios are only one-tenth the size of US companies’, and China’s ODI totaled only 5% of GDP at the end of 2012, against a global average of 33%. While state-owned enterprises lead in foreign investments, their share is falling, as the government eases regulations so more private-sector firms can invest...

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