The wheel has turned: Chinese companies, like the multinationals that have come to China over the past two decades, are reaching for opportunities in new markets abroad. Searching for raw materials, talented employees, technologies, brands, and customers, these companies—many virtually unknown outside China—are themselves becoming multinationals.
As more Chinese businesses succeed internationally, others will probably follow. In interviews with executives at 39 Chinese companies, nearly 80 percent said that globalization is a strategic priority, and of these almost half said that they want their companies to become true multinationals within ten years. Chinese industries that have a relatively large global reach include automotive, pharmaceuticals, high technology, energy, and basic materials; those remaining primarily local are real estate, consumer goods, and retailing. Nearly half of China’s outbound corporate investment focuses on securing natural resources, mostly through acquisitions. Other companies have gone abroad to tap new markets as domestic growth slowed. Still others seek to gain either intellectual property (usually technology, but also product designs, brands, or business processes) or a strategic advantage (such as the scale required to compete with foreign competitors).1
Chinese companies have found acquisitions the fastest way to establish a global presence: in recent years, for example,...