Research Of Foreign Direct Investment By State-owned Enterprises In Hebei Province

In the era of globalization,no country or region can ignore the opportunities and challenges that it brings.Only by making full use of domestic and international "Two Kinds of Resources" and "Two Markets",can we stand firmly and develop steadily in the era of economic globalization.In 2013,President Xi Jinping put forward the "Belt and Road Initiative(BRI)",which has not only exerted a far-reaching impact on the economic development of countries and regions along the belt and road,but also provided a broader development platform for state-owned enterprises,which has played a positive role in promoting industrial upgrading and the transfer of traditionally advantageous production capacity in the entire domestic market.Hebei Province is a major province in China's traditional industries,especially state-owned enterprises with mature technology and abundant production capacity in basic fields such as steel,cement and chemical raw materials,which has the conditions to bridge the gap between product demand and capacity in the countries along the "Belt and Road".The19 th national congress of the Communist Party of China(CPC)made it clear that "We will make state-owned capital stronger,better and bigger." President Xi Jinping also issued the important instructions: "State-owned enterprises are important forces to improve the national comprehensive strength and safeguard the common interests of the people".Foreign direct investment(FDI)is an effective way to promote the development of state-owned enterprises.The government actively introduced supporting service policies to guide and support enterprises in the province to make well use of their own equipments and technological advantages to go outside,and attach importance to the "going globally" strategy from a higher starting point.In this background,state-owned enterprises in Hebei Province seize the opportunity,accurate investment,accelerate “go out” pace significantly.As of the first half of2018,the state-owned enterprises supervised by the provincial SASAC have set up 45 overseas enterprises in 15 countries or regions around the world,with a total of 69 billion Yuan in overseas assets,and have achieved remarkable results,according to the statisticalstatement of the final accounts of Hebei SASAC.However,the foreign direct investment of state-owned enterprises in Hebei province started late,and the overall strength is insufficient.There are still many unsatisfactory aspects in overseas state-owned assets supervision,transnational operation,technological innovation,and internal management.Therefore,this paper chooses foreign direct investment by state-owned enterprises in Hebei province as the research object,which is of theoretical significance not only for expanding and improving regional economy,but also for realizing foreign direct investment leap development of state-owned enterprises in Hebei province under “the Belt and Road Initiative".On the basis of summarizing the basic theory of foreign direct investment,this paper discusses the present situation of foreign direct investment of state-owned enterprises in Hebei Province,points out that foreign direct investment of state-owned enterprises in Hebei province still faces both international and domestic challenges on the macro level,and there are some problems on the micro level,such as insufficient due diligence,single investment method,weak risk awareness of enterprise management,and insufficient international management experience,and makes a detailed analysis and demonstration from three aspects:location selection,entry mode selection and risk prevention.By comparing the foreign direct investment practice and experience of state-owned enterprises and central enterprises in developed countries,it is proposed that state-owned enterprises in Hebei Province should grasp the opportunity of "Belt and Road" construction and Beijing-Tianjin-Hebei coordinated development,accelerate the development of foreign direct investment,fully do due diligence to host countries,thoroughly grasp the political,economic,cultural and other aspects of host countries,put forward plans for possible risks,give full play to their own advantages,choose suitable investment location and entry mode,and develop a way of foreign direct investment in line with state-owned enterprises in Hebei Province.Through the analysis of the factors influencing the location of investment,it gets the conclusion that the traditional industries in Hebei province,such as iron and steel industry,building materials industry,equipment manufacturing,medicine,textile and other state-owned enterprises should choose to establish overseas production and manufacturing bases in Africa,Latin America and other neighboring countries.Resource-based enterprises should invest and develop iron ore and non-ferrous metals in resource-rich areas such as Australia,Africa,Latin America and central Asia to alleviate resources shortage problems.The large state-owned enterprises are supported,such as Hebei Iron & Steel Group and Jizhong Energy Group,which are among the world's top 500 companies,to carry out cross-border acquisitions in developed countries.It is suggested to promote the establishment of economic and trade cooperation zones in the countries along the belt and road and the countries in Africa.Through the analysis of the factors affecting the choice of investment entry mode of state-owned enterprises in Hebei province,the conclusion is drawn that the investment entry mode of state-owned enterprises in Hebei province should choose the road of gradual development.From the perspective of the enterprise itself,it is advisable to choose New investment for foreign direct investment with technological advantages,while it is suitable for Cross-border M&As if it is at a technological disadvantage.It is appropriate to choose Cross-border M&As if it is short of international experience,and New investment can be selected when experience is accumulated to a certain degree.At the same time,according to the enterprise's resource endowment,the ownership structure gradually changes from low control,low investment and low risk to high investment,high control and strong strategic ownership structure.From the perspective of the host country,New investment should be given priority to countries with poor capital market development,and Cross-border M&As can be considered for countries with developed capital market,mature market economy system and relatively low risk.When the foreign capital,foreign exchange and other policies of the host country are discontinuous or unpredictable,the enterprise should centralize the control right.From the point of view of target enterprises,to determine the value of the target enterprises,can produce speed economy,should adopt Cross-border M&As,on the contrary,tend to New investment.By analyzing the risks encountered in the process of overseas investment by state-owned enterprises in Hebei province,it is proposed to establish a four-level risk evaluation system for the government,state-owned assets supervision department,parent company ofstate-owned enterprises and overseas subsidiaries of state-owned enterprises(branches and investment projects,hereinafter referred to as overseas subsidiaries).The function of the risk assessment system will be extended to connect with risk warning and performance assessment respectively to form an effective risk prevention and control system.A four-level linkage mechanism will be formed with risk early warning to improve the early warning range and screening depth of risks.In addition,the enterprises shall integrate overseas investment risks into the enterprise assessment,form a comprehensive assessment system which is more suitable for the management of state-owned enterprises' parent companies and overseas subsidiaries,and implement the risk reward and punishment system.In the end,the paper proposes supporting measures to promote the foreign direct investment of state-owned enterprises in Hebei province.From the perspective of macro system,the government should strengthen the financial support for foreign direct investment,improve the management level of foreign direct investment,and improve the service guarantee mechanism of foreign direct investment.From the micro level,it is suggested that the state-owned enterprises should prudently make foreign direct investment decisions,strengthen due diligence to improve risk awareness,and accelerate technology management innovation to improve internationalization level.