Go Out policy () is the
People's Republic of China
China, officially the People's Republic of China (PRC), is a country in East Asia. It is the world's most populous country, with a population exceeding 1.4 billion, slightly ahead of India. China spans the equivalent of five time zones and ...
's current strategy to encourage its enterprises to
invest overseas.
Most nations favour attracting
inward foreign investment, and support outward foreign investment only passively. The People's Republic of China, however, attaches importance to both inward and outward foreign investment.
Causes
* The People's Republic of China has amassed huge amounts of
foreign reserves
Foreign exchange reserves (also called forex reserves or FX reserves) are cash and other reserve assets such as gold held by a central bank or other monetary authority that are primarily available to balance payments of the country, influence ...
, thus putting upward pressure on the foreign
exchange rate
In finance, an exchange rate is the rate at which one currency will be exchanged for another currency. Currencies are most commonly national currencies, but may be sub-national as in the case of Hong Kong or supra-national as in the case of ...
of
renminbi
The renminbi (; symbol: ¥; ISO code: CNY; abbreviation: RMB) is the official currency of the People's Republic of China and one of the world's most traded currencies, ranking as the fifth most traded currency in the world as of April 2022. ...
, the Chinese currency. Indeed, there has been much demand from the international community for the PRC to
float its currency. In order to deflate that demand, the PRC seeks to employ its foreign reserves by acquiring assets overseas.
* The PRC is opening up the
domestic market
A domestic market, also referred to as an internal market or domestic trading, is the supply and demand of goods, services, and securities within a single country. In domestic trading, a firm faces only one set of competitive, economic, and market ...
in
mainland China
"Mainland China" is a geopolitical term defined as the territory governed by the People's Republic of China (including islands like Hainan or Chongming), excluding dependent territories of the PRC, and other territories within Greater China. ...
as a result of its
open door policy
The Open Door Policy () is the United States diplomatic policy established in the late 19th and early 20th century that called for a system of equal trade and investment and to guarantee the territorial integrity of Qing China. The policy wa ...
, which is further accelerated by its commitments when entering the
World Trade Organization
The World Trade Organization (WTO) is an intergovernmental organization that regulates and facilitates international trade. With effective cooperation
in the United Nations System, governments use the organization to establish, revise, and e ...
. Therefore, the PRC can foresee that world class competitors are now competing for business in the Chinese market, and so the PRC is seeking to equip the domestic firms and their management with international experience so that they can take the competition to the
home markets of the foreign nations and so that they can compete better at mainland China's own domestic market.
History
The Go Out Policy (also referred to as the Going Global Strategy) was an effort initiated in 1999 by the Chinese government to promote Chinese investments abroad. The Government, together with the China Council for the Promotion of International Trade (
CCPIT
The China Council for the Promotion of International Trade (; CCPIT) is a trade body founded in 1952. It also goes by the name of the China Chamber of International Commerce (, CCOIC). CCPIT is under the Ministry of Commerce.
The CCPIT develops bu ...
), has introduced several schemes to assist domestic companies in developing a global strategy to exploit opportunities in the expanding local and international markets.
The programs launched so far by the Chinese Government have these goals in mind:
#increase Chinese Direct Foreign Investment (FDI)
#pursue product
diversification
Diversification may refer to:
Biology and agriculture
* Genetic divergence, emergence of subpopulations that have accumulated independent genetic changes
* Agricultural diversification involves the re-allocation of some of a farm's resources to n ...
#improve the level and quality of the projects
#expand financial channels with respect to the national market
#promote
brand recognition
Brand awareness is the extent to which customers are able to recall or recognize a brand under different conditions. Brand awareness is one of two dimensions from brand knowledge, an associative network memory model. Brand awareness is a key consi ...
of Chinese companies in EU and US markets
Since the launching of the Going out Strategy, interest in overseas investing by Chinese companies has increased significantly especially among
State Owned Enterprises
A state-owned enterprise (SOE) is a government entity which is established or nationalised by the ''national government'' or ''provincial government'' by an executive order or an act of legislation in order to earn profit for the government ...
. Statistics indicate that Chinese direct foreign investments rose from US$3 billion in 1991 to US$35 billion in 2003. This trend was underscored in 2007, when Chinese FDI reached US$92 billion. This boost in foreign investment can also be attributed to the
Chinese Government
The Government of the People's Republic of China () is an authoritarian political system in the People's Republic of China under the exclusive political leadership of the Chinese Communist Party (CCP). It consists of legislative, executive, mili ...
's ability and commitment to create the right environment for foreign investment; and China's huge production capacity, coupled with low labor costs. With a dynamic economy, and a strong business-friendly culture, the outlook for Chinese companies will continue to be positive.
As part of its efforts to restructure state-owned enterprises, the Chinese government has established the
SASAC
The State-owned Assets Supervision and Administration Commission of the State Council (SASAC) is a special commission of the People's Republic of China, directly under the State Council. It was founded in 2003 through the consolidation of vario ...
(State-Owned Asset Supervision Administration Commission), which develops China's equity exchange market, while supporting Chinese foreign investments. SASAC's responsibilities include:
#supervision and evaluation of state-owned enterprises
#oversight of state-owned assets
#recruiting of top executive talent
#drafting of laws, administrative rules and regulations that promote increased development of
corporate law in China
#coordination of local state-owned assets as prescribed by law
The SASAC operates through several equity exchanges such as
CBEX (
China Beijing Equity Exchange
China Beijing Equity Exchange (CBEX; ) is an equity transaction bourse and platform run by the government of Beijing for mergers, acquisitions and restructuring of state-owned enterprises.
Background
China Beijing Equity Exchange was established ...
), which is the largest and most prestigious in terms of trading volume. It is headquartered in the heart of
Beijing financial district
The Beijing central business district, or Beijing CBD (), is a central business district and the primary area for finance, media, and business services in Beijing, China.
Beijing CBD occupies 3.99 km2 of the Chaoyang District on the e ...
. Presently, CBEX has established three international platforms in Italy, Japan and the United States of America. The Italian
CMEX
CMEX (China Milan Equity Exchange) is the first equity exchange platform set up in Europe to help European companies gain access to the ongoing privatization process of Chinese State-owned enterprises. China's equity exchanges were set up by the ...
(
China Milan Equity Exchange
CMEX (China Milan Equity Exchange) is the first equity exchange platform set up in Europe to help European companies gain access to the ongoing privatization process of Chinese State-owned enterprises. China's equity exchanges were set up by the ...
), created in 2007, is CBEX's first international partner, operating as a liaison to facilitate the penetration of Chinese companies into the Italian and European markets and of European companies in China. Following the trend of the Go out policy, some of the most prominent Chinese professional institutions are expanding their business on the international markets.
King & Wood Mallesons
King & Wood Mallesons (KWM) is the largest global law firm in Asia. It has 30 offices and more than 3,500 legal professionals in Europe, North America, Asia and the Middle East. Its predecessor firms include '' SJ Berwin'' of the United Kingdom's ...
, the largest Law Firm in China with more than 800 lawyers and lobbyists, opened branches in various cities of the
United States
The United States of America (U.S.A. or USA), commonly known as the United States (U.S. or US) or America, is a country primarily located in North America. It consists of 50 states, a federal district, five major unincorporated territorie ...
and
Japan
Japan ( ja, 日本, or , and formally , ''Nihonkoku'') is an island country in East Asia. It is situated in the northwest Pacific Ocean, and is bordered on the west by the Sea of Japan, while extending from the Sea of Okhotsk in the north ...
, while
Grandall Legal Group
Grandall Law Firm ( Chinese: 国浩律师事务所), is a Chinese law firm provide full service in Chinese corporate and commercial law. Grandall has offices across 32 cities located in Beijing, Shanghai, Shenzhen, Hangzhou, Guangzhou, Kunming, Tia ...
(one of the most prominent Chinese Law Firms, with a staff of more than 600 professionals) through its International Department has established a European hub called the “China-Europe Legal Group” to assist Chinese companies in legal and lobbying work operating and expanding in Europe.
Carone & Partners Carone is a surname. It may refer to the following notable people:
* Jim Carone (born 1981), American college baseball coach
* Juan Carlos Carone (born 1942), Argentine footballer
* Mauricio Claver-Carone, American political advocate
* Nicolas Ca ...
is a member law firm of the “China-Europe Legal Group” in Italy.
Examples of the Go Out policy
Overseas SEZs
From 1990 to 2018, Chinese enterprises established eleven SEZs in sub-Saharan Africa and the Middle East including: Nigeria (two), Zambia, Djibouti, Kenya, Mauritius, Mauritania, Egypt, Oman, and Algeria.
Generally, the Chinese government takes a hands-off approach, leaving it to Chinese enterprises to work to establish such zones (although it does provide support in the form of grants, loans, and subsidies, including support via the
China Africa Development Fund).
These zones fall within the Chinese policy to go out and compete globally.
The first Chinese overseas SEZs facilitated the offshoring of labor-intensive and less competitive industries, for example in textiles.
As Dawn C. Murphy summarizes, these zones now "aim to transfer China's development successes to other countries, increase business opportunities for China manufacturing companies, avoid trade barriers by setting up zones in countries with preferential trade access to important markets, and create a positive business environment for Chinese small and medium-sized enterprises investing in these regions."
Agricultural enterprises in Africa
Since the mid-1990s, China has encouraged its agricultural enterprises to seek economic opportunities abroad as part of its go out policy, including to Africa.
Chinese policy guidance has specifically encouraged such efforts in rubber, oil palm, cotton, vegetable cultivation, animal husbandry, aquaculture, and assembly of agriculture machines.
The encouragement for agricultural enterprises to go out has also resulted in the creation of Agricultural Technology Demonstration Centers in African countries.
The function of these centers is to transmit agricultural expertise and technology from China to developing countries in Africa while also creating market opportunities for Chinese companies in the agricultural sector.
China is motivated to establish these centers out of both an ideological commitment to fostering
South-South cooperation and sharing its experience with less developed countries and by a pragmatic desire to increase its long-term food security.
China first announced its Agricultural Technology Demonstrations Centers at the 2006 meeting of the
Forum on China-Africa Cooperation. It launched 19 of these centers between 2006 and 2018, all in sub-Saharan Africa.
See also
*
Economy of China
The China, People's Republic of China has an upper middle income Developing country, developing Mixed economy, mixed socialist market economy that incorporates economic planning through Industrial policy, industrial policies and strategic Five- ...
*
Foreign policy of the People's Republic of China
References
{{Economy of China
Economic development in China
Trade in China
Chinese investment abroad