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When the Hangzhou-based Holley Group, China's leading utility meter manufacturer purchased the telecom technology arm from Phillips Semiconductor last year giving it a short cut into the world's mobile CDMA (code division multiple address) market, the deal made headlines around the world.
"If foreigners can come to China and share our cake, why shouldn't we go out and share apart of theirs?" remarked Wang Licheng, Holley's chairman.
Wang's global strategy of investing abroad since the 1990s has already turned the company from a humble bamboo broom maker to what it is today - a 5 billion yuan (US$602 million) transnational corporation. The firm has now seven overseas companies thanks to painstaking efforts over the past 20 years.
In fact, Holley is not the only success story among a rapidly growing trend of firms "going out" in East China's Zhejiang Province, all part of their efforts to enhance competitiveness.
Equally newsworthy was the "going out" of Chinese traditional medicine by Zhejiang Kanglaite Pharmaceutical, which is now in the first phase of clinical human trials in the United States on a cancer drug derived from a Chinese herb.
If the trials are successful and win the approval of the relevant US drug licensing regulators, the company stands to make a considerable annual profit.
Other "going out" overseas investments cover a wide range of businesses, including household goods manufacturing, industrial processing, engineering contracting and labour services, transportation, research and development, department stores and agriculture.
"In Zhejiang, 'going out' is not a new word at all. As more and more foreign multinationals enter China, their Chinese counterparts in Zhejiang have also started heading in other directions - out into the world market - during the past decade," said Zhong Shan, director of the provincial Department of Foreign Trade and Economic Co-operation.
Zhong said, by the end of this September, the province had established 1,018 overseas companies and organizations in 97 countries and regions, with a total investment of about US$500 million.
Although the figure is not much compared with the US$19.3 billion worth of foreign investments in the province in the past four years, it is growing at a rate of 55 per cent each year.
"This is just the beginning. In this fourth largest economic province in the country, overseas expansion is an effective means for many businesses to further prosperity," said Zhong.
Zhejiang has built up significant productive capacity, especially in household electrical appliance manufacturing, textiles and clothing, machine building, chemicals and building materials sectors.
"However, sales of these products in the domestic market have been stagnant. Consequently, corporations must seek overseas markets to solve the problem," said Zhong.
"On the other hand, China's entry into the WTO has pushed us out into the world competition," said Zhong.
"But one of the best ways to avoid problems such as trade barriers and different game rules is to actively explore the foreign market by ourselves," said Wang.
"We suggest that carrying out traditional trade with foreign partners is not enough. More enterprises should set up their own businesses, factories, markets, and research centres abroad, so that a widely covering international sales system can be established in the near future," said Zhong.
(China Daily November 6, 2002)
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