Why Chinese Enterprises Must Go to The Outside


With the economic development and information technology era, China is catching up with developed countries in many aspects, and Chinese enterprises are facing new opportunities to expand and strengthen. Especially after the 2008 financial crisis, many large multinational corporations in the West are faced with this or that problem, which gives Chinese enterprises “turn overtaking” opportunities. However, whether to seize the opportunity to win this round of competition for Chinese enterprises is clearly a big test.

To further enhance China’s position in the global value chain, Chinese enterprises need to go out first. Fuyao Group has been in the global industrial supply chain, from the law of the operation of enterprises, to do auto glass is bound to be with the car manufacturing plant in the local processing. Where the car factory, we just go to where. These are the laws of the market and the modern enterprise management experience, not my personal decision. Of course, Fuyao 65% of market sales in China, I can not leave the Chinese roots.

In addition to market needs, the domestic labor and capital in recent years, factors such as rising prices do bring manufacturing enterprises great pressure. Enterprises seeking to “go out”, purely accounting for the cost and profit after the rational choice. However, enterprises “going out” is not so easy to say. I personally have this experience.

A business decision to invest overseas, we must first think about where to go, go there to do, is to make money, or just to expand the business in the international impact of your investment in the local understanding of how much?

Fuyao from 20 years ago wanted to build factories in foreign countries to expand the international market, especially into the US market. The United States is the world’s largest automobile producer, Fuyao as a manufacturer of automotive glass, of course, to set up factories in the United States, into the US market. In the beginning, I took $ 10 million in accordance with their own blueprint to lay a foundation in the United States, the results down the drain. But I can not be reconciled to the United States consultants, insisted in the United States to expand the Fuyao market strategy, and finally changed, including Wall Street, including many aspects of our views. According to Fuyao in the United States for so many years of experience, manufacturing enterprises do not have their own technology and brand, it is best not to go to the United States.

Fuyao is only a microcosm of the pace of Chinese enterprises to increase their investment abroad. Since the beginning of this year, the scale of China’s foreign investment has become more obvious than the actual utilization of foreign capital. In fact, China’s foreign investment has achieved 13 consecutive years of growth, an average annual increase of up to 33.6%. From 2013 onwards, China’s foreign investment has shown a “blowout” development trend in 2014, China’s first net exporter of capital. China’s foreign direct investment stocks in 2015 exceeded the trillion mark for the first time. And Fuyao all the investment in the United States have been the China Development and Reform Commission, Ministry of Commerce and other relevant departments for approval. And Fuyao is a listed company, each of a foreign investment will be clearly reported to the Board and inform the shareholders, financial regulation is also very strict.

How to maintain the competitiveness of China’s economy

In the interview before, I mentioned the current cost of manufacturing in China and the United States, the intention is to point out that our manufacturing is currently facing important issues, and then solve these problems to be solved. I feel that it is necessary to say these words, to offer advice and suggestions to the country. Our manufacturing industry is indeed more developed than in previous years, but we can not always lie there to eat the capital. Chinese products in the international market competitiveness of the last two years showing a weakening trend. China is the Chinese of China. In this land, everyone should be responsible for the development of the country.

In the global economic downturn, China needs to know where its competitiveness lies and how it can sustain and further enhance its competitiveness. I think we need to work in the following areas:

First of all, the entrepreneur’s social responsibility to improve. Entrepreneurs can not blame the profits, but in making money at the same time, my heart should also consider whether it is conducive to national and social development, progress, whether the people’s lives have been effectively improved.

For example, Fuyao 40 years has always insisted on doing the glass industry, make money in my personal name are donated to the community, never want to do what the financial, real estate, we have always insisted on this point. Will make money, but also have a high degree of social responsibility. China to rise a number of interested in serving the country for the people of entrepreneurs and industry elite.

Second, to restrain their own desires. In addition, the highway and high-speed rail do not need to repair too much, according to the actual needs of the domestic planning and construction, so that these infrastructure needs in those areas where more needs.

Third, to help small and micro enterprises to develop. Small micro-enterprises is the peripheral nerve of the national economy, the role of large enterprises have a service, but also help large enterprises to digest. No small micro-enterprises, economic body will be sick. Japan, South Korea, Germany, small micro-enterprise output has reached a high GDP ratio.

China can not learn to “de-industrialization”

Since reform and opening up, China from the United States to learn a lot of experience, to our development has helped. However, we must see that the United States from 1776 after the founding of the country began to promote industrialization, to the early 19th century into the industrialization of the 20th century, 70 years to industrialization. While China’s manufacturing industry is very large, but has not yet entered the real industrialization, but has entered the virtual economy trend. China has not yet reached that stage, the United States to the industrialization policy to China, will lead to acclimatized. Therefore, I think the Chinese economy is too “virtual”, and should make some adjustments.

Now the United States of materials, electricity, water, energy is cheap, the past also has a large number of plants are still, it is trying to revitalize the manufacturing industry to facilitate the conditions. However, China still has its own advantages relative to the United States. The United States has been to industrialization for nearly 50 years, there have been two generations of Americans do not want to choose to join the manufacturing sector, most people went to Wall Street after graduating from college or Silicon Valley. Detroit, once hailed as a symbol of American manufacturing, became an empty city and had to go bankrupt. Therefore, manufacturing enterprises in the United States is difficult to recruit skilled workers.

In addition, in the United States, corporate access to bank loans is difficult. Banks carry out very strict credit rating on enterprises. If A + or 1A, 2A, 3A can not be rated, it is difficult for enterprises to obtain loans, or the loan interest is very high.

But China is now also a similar sign. In my personal sense, after 2000, China’s university graduates have begun to reluctant to go to the manufacturing industry, they preferred to the banks, fund companies, investment institutions, government units and IT companies, to manufacturing less and less. As this development continues, China may have appeared earlier in the dilemma the United States has experienced.

Therefore, China should now learn from the United States, the United States has begun to pay attention to reverse the status quo, we should immediately turn around. If we are still moving in the direction of the current virtual economy too far, in a few years, the problems may be more and more.