China's outbound investment grows in Jan-Sept

The ODI landscape is fast shifting to include more sectors on the radar and more private companies. What started out as a government mandate to "go abroad" is turning into a key part of Chinese companies' growth strategy.

From January to September, China's Outbound Investment saw a big jump, with North America, Europe and the rest of Asia the top destinations for China's capital outflows. Sector wise, energy, still dominates Chinese investments abroad. But, analysts say China's ODI will become more diverse in both target markets and fields in the coming year.

China is the world's third largest investor after the US and Japan. China's outbound direct investment, or ODI, increased more than 17 percent in the first 9 months versus a year ago. Energy and metals, at 64 percent of the total investment, form the main theme, but China's ODI is becoming more diversified.

"We are seeing Chinese investors investing in countries and sectors that we haven't seen before, like the manufacturing sector." Michael Turnbull, manager of Mergers & Acquisitions AIG Asia, said.

Investment in consumer goods, agriculture and foods saw considerable increases this year, primarily driven by Shuanghui's $7 billion acquisition of the world's largest pork processing company Smithfield Foods. Interest in media and leisure has been driven up by Dalian Wanda's $2.6 billion acquisition of AMC Entertainment last year. As the two mega-deals show, snapping up international assets is no longer the sole domain of state firms.

Reporter: "While the Shuanghui deal went through, many other Chinese acquisitions still face stiff regulatory scrutiny and sometimes shareholder opposition. Then when the deal wraps up, it's the beginning of a new challenge -- integrating new assets. Still, analysts say going global is sometimes a must for Chinese companies to keep growing."

"Certain industries have the problem of overcapacity, Chinese companies have been trying to go overseas to look for target company to acquire technology and brand name to move up value chain, so they have better products better services tailoring to the China market." Eleanor Wu, partner of Ernst & Young, said.

The ODI landscape is fast shifting to include more sectors on the radar and more private companies. What started out as a government mandate to "go abroad" is turning into a key part of Chinese companies' growth strategy.