Right time for SMEs to invest abroad

Small and medium-sized enterprises from China should shed their fears about intense competition and cash in on the golden period for investment in the United States, industry experts said on Tuesday.

Favorable government policies and a conducive investment environment are also aiding the "going global" efforts of Chinese SMEs, said Michael Gordon, chairman and CEO of USAChina Investments Group.

"The biggest challenge for SMEs is to find financing channels, and in the US we have many tools to customize financial plans for businesses that are growing," said Gordon, a former adviser for the Zhou Enlai Peace Institute in Beijing, which fosters US-China trade relations with high-level government support from both countries.

At the same time, the policy has been shifting to give more support to SMEs and help them go global.

Three years ago, 80 percent of the investment from China to the US was from State-owned enterprises, but today that landscape has completely changed and about 70 percent of the transactions are by privately owned companies, Gordon said.

"They are not necessarily small companies, but private companies looking for a wider variety of investment opportunities. So we can see the diversification happening," he said.

Official data show that about 45 million Chinese SMEs contribute to 55.6 percent of the country's GDP, and over 65 percent of all new jobs in both countries are created by SMEs each year. But less than 10 percent of the bilateral trade came from SMEs.

"There is room for growth in cooperation of SMEs from both countries, that are complementary in many fields," said Gordon, adding that industries such as healthcare, clean technologies and aviation have the maximum potential for growth.

Though more business opportunities are expected from the SME cooperation, Chinese firms still have a long way to go before they can make inroads in the US markets.

A previous poll last year shows that a majority of Americans believe China poses the greatest threat to the US economy. The US government has shut down many Chinese merger and acquisition deals in US companies. One example is the aborted attempt by State-owned China National Offshore Oil Corp to buy US oil company Unocal in 2005.

Gordon said that the US government disallowed less than 5 percent of the Chinese deals in America, which is a normal practice that China would also do in the case of US investments.

"China has things that are off-limits and strategic and so does the US," he said.

"Sorting those lists out so that people can be clear about what they can or cannot participate is very important for the long term relations."