CBRC Assistant Chairman Yan Qingmin delivered a speech at the China Overseas Investment Annual Meeting
--- Sticking to the Development of Real Industries and Constantly Improving Financial Services
The CBRC Assistant Chairman YAN Qingmin attended and addressed the China Overseas Investment Annual Meeting. He made three points on how the banking sector would support the overseas investment strategy of Chinese companies.
First, to fully
understand the new climate facing Chinese companies in implementing their “Go
Global” endeavor. Globally, the
economy and financial industry has become even more uncertain particularly in
three regards. Firstly, in
Meanwhile, we need to
be aware of some favorable factors, e.g. there are strong demands for money
from international markets, some investment objects are under-valued, and
Second, banking support should be given to those companies of strategic importance. Firstly, priority should be given to strategic investment projects that will support future economic growth, to projects concerning emerging industries, such as IT, energy efficiency, environmental protection, new energy, bio-tech, and new materials, and to projects that are conducive to deepening mutually-beneficial cooperation in the field of energy, resources, and irreplaceable high-tech and advanced manufacturing. Secondly, priority should be given to those Chinese companies that enjoy well-known brand, strong technical expertise and comparative advantages. Thirdly, priority should be given to projects that will help the companies’ to improve core competence and attain the scale of economies.
Third, Chinese banks should pay attention to risk control. In this regard, they need to manage and control 4 major risks. Firstly, risk associated with decision-making prior to investment. They need to help Chinese companies gather information about the laws, policies, institutions, markets, society, culture and geography of the destination and fully assess the country risk, legal risk and cultural risk concerning the destination. By understanding the potential risks facing the companies and warning them against such risks, the companies are able to make better decisions. Secondly, transaction risk in the course of investment. The banks should help the companies perform investment investigation and assets evaluation, prudently assess the deal’s viability, and design safe, stable transaction structure and reasonable financing plan. Thirdly, post-investment operating and management risks. The banks should help the companies address the legal and policy changes in the destination markets, and effective resolve the issues concerning resources integration and cultural inclusion. They should also actively encourage the companies fully tap local financial resources and improve risks control capability. Fourthly, banks’ own operating risks. The banks should develop “go global” risk management strategies in line with objective judgment of international political, economic and financial trends, and prudently determine their own risk preferences. They should also try to understand the industrial policy orientations of the destination to fully assess the potential risks they may be faced with, and develop contingency response plans to contain the risks.
assistant Chairman Yan pointed out that “going
global” is an important strategy of
Copyright: China Banking Regulatory Commission