Hurdles ahead

China's overseas investment, by the end of 2010, mainly went to the manufacturing, retail, wholesale, commercial services and mining industries.

But Chinese enterprises are diversifying their overseas investment into industries such as culture.

In May, Dalian Wanda Group, China's largest entertainment group, agreed to buy AMC Entertainment Holdings Inc for $2.6 billion including debt, in a bid to expand into the US. The deal marks the largest-ever buyout of a US company by a Chinese firm, and also made Wanda the second-largest cinema operator in North America.

Although many foreign countries welcome Chinese investment, especially since the outbreak of the global financial crisis, there are still various restrictions.

Huawei Technologies Co Ltd, China's leading telecom infrastructure provider, early this year missed out on building a national broadband network in Australia after the Australian government said it had a responsibility to protect the "integrity" and information security of a "strategic and significant government investment".

Justin Knapp, director of China Outbound Practice with Ogilvy Public Relations in Beijing, said "there are two important lessons" for Chinese companies facing restrictions in the US.

"First, Chinese companies should avoid politically sensitive acquisitions in the US and consider pursuing minority stakes of solicited assets in a non-aggressive public manner. Second, Chinese companies must leverage non-government, third-party associations as much as possible to influence the US government and local communities in which they seek to invest," said Knapp.

Chen from the Ministry of Commerce agreed. "Chinese enterprises own capital, capacity and technology, but what is weak is their cultural responsibility and corporate social responsibility.

"China's ODI growth cannot be sustained if this problem is not solved."

Chen said many Chinese companies that own overseas business have set good examples.

Fujian-based Licheng Garment Co, which has a factory in Bangladesh, employs about 8,000 local workers. Every year, the company invests 5 percent of its profits in charity projects, including donations to schools and temples, said Chen.

Michel Wormser, vice-president and chief operating officer of the Multilateral Investment Guarantee Agency of the World Bank Group, said it is very important to create benefits for local people and local communities.

Contact the writer at dingqingfen@chinadaily.com.cn