Chinese companies need to study foreign markets: Boao panelist

As there is no "one-size-fits-all" model for cross-border investment, it is important for companies to fully understand the market they want to be in, said business leaders at an international forum on March 26.

"Companies need to prepare themselves, as an understanding the opportunities and challenges in the market is crucial," said Hans-Paul Burkner, Boston Consulting Group chairman.

He was speaking in the panel discussion Greenfield, or Mergers and Acquisitions, at the Boao Forum for Asia Annual Conference 2019.

A greenfield investment is a type of foreign direct investment where a parent company builds its operations in a foreign country from the ground up.

"Chinese companies need to study the market (they want to invest in) very carefully," said Burkner.

"They usually overpay (sometimes more than twice as much money) and they need be much more thoughtful and prepared."

John Graham, senior managing director and global head of credit investments at the Canada Pension Plan Investment Board, said building a team consisting of local talent is important for companies in order to understand the local market.

His company employs around 100 people in Hong Kong and is expanding its team to the Chinese mainland.

Different companies in different industries at different stages will make different choices when going global, said Gu Jianguo, president of China Jianyin Investment, an investment group focused on equity.

"As for us, we usually choose M&A and prefer mature companies with stable profits and a stable management model," he said.

Zhang Hongli, partner and co-chairman of Chinese private equity firm Hopu Investment, said the global financial system does not completely reflect the world today, which is why there is a lot of imbalance in trade and regional development.

He called on Chinese companies, and those across the world, to work together for the betterment of the global economic order and the governance system.

"The principle of consultation and cooperation for shared benefits, as emphasized by Chinese President Xi Jinping, is a good way for companies to cooperate," said Zhang.

Other panelists included Hazem Ben-Gacem, co-CEO of Investcorp, Paolo Borzatta, senior partner of The European House-Ambrosetti, Jiang Xipei, founder and board chairman of Far East Holding Group Co, and Wang Jianjun, chairman of the board at China VAST Industrial Urban Development Company.

The session was moderated by Wu Yibing, joint head of the enterprise development group of Temasek Holdings and head of Temasek Holdings China.