- POSTED: 10 Oct 2013 23:33
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China is now the third biggest global investor behind the US and Japan, with outbound investment growing at an average of 35 per cent between 2005 and 2012.
SHANGHAI: Overseas investments by Chinese companies are expected to surge over the next five years.
At the current rate of expansion, China could very likely overtake Japan as the world's second biggest foreign investor after the US.
French resort chain Club Med operates a resort nestled in the midst of Guilin’s breathtaking hills, the second property in China. The venture was made possible with a 300 million yuan (approximately US$49 million) investment from a Taiwanese businessman, who owns the land occupied by the resort.
Club Med also happens to be the target of a takeover bid by China's Fosun Holdings. The acquisition, said to be worth nearly US$720 million, is the latest in a series of overseas investments by Chinese companies.
Last month, another Chinese company -- Shuanghui International Holdings -- got the greenlight to buy Smithfield, the world's largest pork producer, from its American shareholders in a deal worth US$4.7 billion.
Experts predict that China will become a net global investor by 2017 -- with outbound investment reaching US$172 billion -- becoming the world's second largest foreign investor after the US.
Besides basic necessities, Chinese firms with deep pockets are also looking to park their money in brands and sectors that can benefit from China's fast-growing middle-class consumer market.
Fosun Group chairman Guo Guangchang said: "A driver of China's development is the upgrading of the consumer, industries and cities. So China needs better products in tourism, aging, education and environmental protection.
“This is the direction which Fosun is investing in. Europe, for example, has a rich history of traditional food. They're not only filling, but they're full of culture and history -- like wine, olives and ham."
In seven years, China's ranking as a global investor has jumped from 16 to what it is now -- the third biggest global investor behind the US and Japan -- with its outbound investment growing at an average of 35 per cent between 2005 and 2012.
However, it is not always easy for Chinese firms to gain the trust of the companies they invest in. Fosun Group, for example, started small... with an initial seven per cent stake in Club Med back in 2010.
Club Med CEO Henri Giscard d’Estaing said: "Fosun (board members) have demonstrated to the other board members they're just shareholders, they're able to help us, in giving connections, in supporting us at our projects… they deeply respect the culture of the company and they use this know-how to grow Chinese tourism."
That strategy that has worked well, as Club Med aims to grow its presence in China with three more resorts in the next two years.