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China announces new policy which encourages & supports private enterprises to invest and to develop business abroad
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More Chinese property investors, developers, contractors & suppliers are coming to your shores.
Have you got your B2CB (Business to Chinese Business) strategy & action plan ready?



China's National Development & Reform Commission, together with 12 other ministries including Foreign Affairs, Industrial Intelligence & Information, Ministry of Commerce, and the Central Bank of China, announces a significant policy earlier this week on Wed 4.7.2012 - "Implementation guidelines regarding promoting and guiding private enterprises to actively develop investment outside China".  The guidelines are about forming supporting policies to encourage private enterprises to invest overseas, streamlining and framing management of private enterprises' foreign investment, and delivering support services to private enterprises for their foreign investment plans.

Promotion & Support
According to the guidelines, China is going to substantially increase its directing and guiding effort for Chinese private enterprises to invest overseas at the macro level.  The investment overseas is to be guided in such a way so that it will not be ad-hoc and confused, but in an orderly way.  The guidelines list requirements for communication and co-ordination between governmental departments, research on topics concerning foreign investment, and resolving major issues that may be encountered in developing foreign investment and business in a co-ordinated way.

Management
The guidelines require relevant government departments to formalise control of Chinese private en
terprises' business conduct when carrying out foreign investment or developing business overseas; to guide Chinese private enterprises how to follow foreign local laws and business standards; to pay attention to protection of foreign local environmental resources; to respect foreign local social customs & habits; to protect local workers' legal right; and to carry out required social responsibilities.
 
The guidelines also require government departments to promote active public relation programs by private enterprises, improvement of communication & connection with overseas business communities, and to establish a good image for Chinese private enterprises investing overseas - law-abiding, trust-worthy, and social-responsible.

The guidelines require government departments to guide the co-ordination and co-operation among Chinese private enterprises when investing overseas, to avoid confusion and negative competition.

Implication for business
The announcement of the policy guidelines indicates that the "Go-Abroad" policy of last 2 years is now elevated to another level of implementation.  For China to control domestic inflation successfully, particularly in escalation of property prices, and to balance foreign trade and investment, encouraging Chinese private enterprises to invest abroad is a logical & expected policy.  This implies that more and more Chinese property investors, developers, contractors and suppliers will turn up in overseas markets which are new frontier for them.  Vice versa, these new investors with abundant financial resources are new opportunities as customers, JV partners, funding sources, supplies, service resources, for many local businesses around the world.

However, many of these Chinese private enterprises would be first-timer investors and business developers in foreign markets.  Most of them would lack local language skill, local market knowledge, local business conduct understanding, and local legal knowledge.  To appeal to these new investors and customers, local businesses may first need to understand the Chinese way of business, the Chinese way of receiving information and how to present the local business in Chinese to them - at the minimum, a proper, relevant and meaningful Chinese name of the business (if desired) on namecard and description of the business in Chinese on business marketing brochure and website.  Another relevant point is to have an appraisal of the business logo to check if it unintentionally relates to anything "bad and nasty" in the eyes of Chinese culture.  Bear in mind that Chinese language and written communication is heavily based on graphic pattern and pattern recognition.   The assistance of a consultant who understands both the local business practice and the Chinese business practice will be very valuable in such circumstance.  Speaking the "language" and projecting the "writing" that the Chinese private enterprise business owners are accustomed to will give foreign local businesses a big boost in attracting and closing deals with this new wave of investors.


AAPAC Group can help
If you need assistance in terms of setting your business up to prepare for B2CB (Business to Chinese Business) marketing, our company can help, particularly if your business is in property development, project management, planning, architecture, design, engineering, construction, building material & system, properties & real estate.  The author has previously assisted major architectural firm in establishing Chinese name for the business, which has become a success in the China market.  He has also assisted in preparing their marketing brochure in Chinese and other promotional material in Chinese graphics.
 

Analogy of high liquidity in China
- "When water level in a reservoir rises to the top, the build-up of massive pressure behind the dam needs to be lowered so that the dam structure is not subject to extreme loading for long period of time.  Water needs to be released in a controlled manner so that the dam as well as the areas outside the reservoir will not be damaged."


Fabian Chan
Source: HKEJ - 7.7.2012

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China encourages private enterprises to invest and to develop business abroad

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