F REIGN TRADE - 中国国际贸易促进委员会

ECONOMYDomestic salesDomestic sales growthDomestic market share growthDomestic market shareProfitability of domestic salesProfit growth rate ofdomestic salesFigure 2.3 Proportions of the enterprises going global that are satisfied with domesticbusiness over the past three yearsDomestic salesDomestic sales growthDomestic market shareDomestic market share growthProfitability of domestic salesPorfit growth rate ofdomestic salesFigure 2.4 Proportions of state-owned and private enterprises going global whichare satisfied with their domestic business over the past three yearsSell the parent company'sproducts in the host countryProvide after-sales servicefor the parent productImprove parent company's reputationin the domestic marketObtain international famous brandsAvoid trade barriers from mainexport destination countriesObtain parts or raw materialsfor the parent companyUse local cost advantage to produceparent company's productsUse local technological advantagesto research and developmentUse local policy to reduce taxesfor domestic businessTo invest in the domesticmarket as foreign capitalFigure 2.5 Proportion of overseas branches of enterprises going global by importanceof functions44.5%47.0%49.3%50.2%53.5%57.5%40% 42% 44% 46% 48% 50% 52% 54% 56% 58% 60%44.6%46.6%46.9%State-owened firms49.1%51.7%55.2%54.0%Private firms56.1%55.2%59.1%64.2%68.7%40% 45% 50% 55% 60% 65% 70%20.9%40.0%38.1%35.8%34.3%31.6%45.2%57.6%54.2%66.1%0% 10% 20% 30% 40% 50% 60% 70%conducting R&D activities using localtechnological advantages (34.3%), andinvesting in the domestic market as foreigncapital (20.9%), are less important.From figure 2.5 we can see that all thefunctions that reflect market-seekingopportunities rank ahead of those thatreflect the motive to obtain overseasresources. Survey data show that theimportance of seeking market opportunitiesis greater than the importanceof obtaining overseas resources for surveyedChinese enterprises going global.This also shows that the Chinese enterprisescarry out overseas investmentwith the aim to expand markets ratherthan contend for resources.See Figure 2.52. Importance of internationalized operationsto private enterprisesBased on the comparison of stateownedenterprises and private enterprisesin terms of relative importanceof various functions undertaken bytheir overseas branches, we see that allthe functions, except the function ofobtaining parts or raw materials, aremore important to private enterprisesthan to state-owned enterprises. Thisindicated that for private enterprises, theimportance of either seeking for marketopportunities or obtaining overseasresources is greater than that for stateownedenterprises. This also signifiesthat the success of internationalizationis more important to the development ofprivate enterprises.3. Differences in purposes of investmentin European & American countries andin Africa.According to a comparison betweenoverseas branches established inEuropean and American countries andthose in African countries in terms ofthe importance of various functions,overseas branched in European andAmerican countries mainly aim to produceand promote products for parentcompanies, provide after-sales servicesto parent companies, improve the localreputation of parent companies andexplore other market opportunities.Reflecting strategic-asset seeking motives,overseas branched in Europeanand American countries mainly intendto conduct R&D activities using localtechnological advantages and invest inthe domestic market as foreign capital.By contrast, overseas branches in Africamainly hope to circumvent trade barriersin major destinations of export andmanufacture products for parent companiesby exploiting the cost advantagesof local areas.26