Analysis about Chinese companies’ increased interest in operating outside China..doc

The reasons for Chinese companies’ increased interest in operating outside China. During the past 30 years, China has become the world’s second largest economy (World Bank, 2011). Some corporations from China are no longer limited to the domestic market and have changed their business models from international trade to Outward Foreign Direct Investment (OFDI). As more and more Chinese business organizations expanded their activities around the world, there is special concern about the main reasons for Chinese companies’ increased interest in operating outside China. In this essay, first the author will give some definitions and relative information about OFDI. In the following three paragraphs the three main reasons include resource seeking, market seeking and strategic assets seeking for Chinese companies’ expansion outside China will be given with six examples ie. the abroad operating of Sinopec and CNPC, Haier Group Corporation and Shanghai Electric Appliance Technology invest in foreign countries and two big acquisitions by Lenovo Group and Geely Automobile .Finally the conclusion will show that resource seeking, market seeking and strategic assets seeking are why Chinese companies operate outside China. Outward Foreign direct investment (OFDI) means “a direct investment into production or business in a country by an individual or company in another country, it includes mergers and acquisitions, building new facilities, reinvesting profits earned from overseas operations and intra company loans” ( Wall Street Journal, 2012 ). OFDI is a country’s important indicator of economic trends and immediately shows the development level and the degree of openness. In the 21 century, especially after China joined World Trade Organization (WTO), more and more Chinese companies have increased interests in operating outside China and become an increasingly important emerging power of international competition. The data from a report by Chinas Ministry of Comm