China Ramps up International Investment
Greater Localization
Criticism abroad of China's enterprises with regards to corporate social responsibility has been vociferous. It includes charges that such enterprises bring Chinese workers with them rather than hiring locals; also that they have failed to protect local environment and made scant contributions to local communities.
"This might be true of some enterprises in the past," He said, going on to explain that this could be ascribed to Chinese enterprises being new to the international arena. There are some Chinese entrepreneurs that indeed run their business abroad with a fixed Chinese-style mindset and management mode.
"In the past, private enterprises often took their Chinese workers abroad with them. When asked why, their response would be that Chinese workers are the world's most industrious, and that in addition to being highly efficient, they are prepared to work overtime, endure hardship and survive tough environments," He said. From an economic perspective, this practice is seemingly defensible. But if investment is made overseas, it should include employing locals. As employment brings stability, creating more jobs is of even greater social significance than making donations towards building kindergartens and primary schools in the destination countries.
Aware of the importance of corporate social responsibility, the theme of the 5th China Overseas Investment Fair held last December was "Responsibility, Investment and Cooperation."
"To make a successful investment, it is vital to take corporate social responsibility into account. I don't have accurate statistical data to hand, but based on my tracking of enterprises that are going global I find many of them are changing. They frame their localization policy and hire more local workers," He said. After acquiring Volvo, Geely did not send a single Chinese employee to Sweden, instead hired more than 1,200 locals. The company's original intention was to run its overseas business with Volvo's original staff. More and more Chinese enterprises are acknowledging their social responsibilities abroad by building kindergartens, hospitals and schools as well as contributing to the construction of local infrastructure.
In 2012 Chinese overseas enterprises hired more than 700,000 local employees. Tax paid to destination countries that year exceeded US $22 billion, according to official data.
"After all, our enterprises have been going global for only a short period. We need time to learn about and adapt to local communities. The outside world should take into consideration the time these enterprises need to integrate with local communities rather than stereotyping them based on isolated instances," He said.
The Facts of the Matter
Since the outbreak of the world financial crisis, world opinions on Chinese investment have been mixed. On one hand, media reports have repeatedly stated that the world welcomes China's cash; on the other, it is clear that world media delight in reporting on rejections of Chinese enterprises' overseas investment on the pretext of national security.
"There are restrictions on Chinese investment in some countries. For example, the U.S. turned it down for reasons of national security. Huawei and Sany Heavy Industry have both encountered the same predicament," He said. These cases have entailed the involvement of many interest groups, including Congress and lobbying groups. "We are capable of identifying our own problems, notably a lack of awareness of our image as regards outbound investment. The inappropriate behavior of certain Chinese enterprises has damaged the overall standing of Chinese enterprises abroad," He said. It is imperative, therefore, that Chinese enterprises investing overseas abide by local laws. This will help build a good reputation.
"Encountering different concepts, practices and traditions is inevitable when investing in other countries. You can't change them, but you can change yourself by standardizing and promoting your enterprise in ways that dispel other people's misgivings. If the destination country declines your investment for reasons of national security, you can leave governments to deal with the matter, because it is a government-level issue," He said.
The U.S. turning down Chinese investment on the grounds of national security is definitely the exception rather than the rule. The media sensation it causes can be ascribed to the reporting biases of foreign media that tend to exaggerate certain issues with the intent of smearing Chinese enterprises. On the other hand, certain domestic media also overreact to such instances.
"I don't agree that failed Chinese overseas investment ventures outnumber those that succeed," He said. He holds that media should be objective in their reports, and size up Chinese investment holistically rather than exaggerating problems in a way that signifies an overt bias against China.
