At this year's Boao Forum for Asia, China reaffirmed its commitment to further opening-up. Moves to further reduce market entry barriers and the "going out" strategy, both parts of the Belt and Road Initiative, constitute two pillars of China's opening-up efforts in the new era.

At the same time, the global economy remains in the shadow of the 2008 financial crisis, despite global growth rising to 3 percent in 2017, up from 2.2 percent a year earlier. Along with the resurgence of protectionist measures in major developed countries since 2016, this means that global trade faces considerable challenges and world economic development remains in a precarious state.

Under such domestic and international conditions, we must expand the scope of our opening-up efforts and improve the business environment to attract foreign companies conducive to the upgrading of Chinese manufacturing. We also need to encourage Chinese enterprises, especially manufacturers, to compete internationally, explore new markets, and help upgrade manufacturing technology via the process of globalization.

2017 was a period of adjustment and consolidation for many Chinese companies. In the long-run, it is inevitable that Chinese enterprises will expand their overseas footprints, especially those in manufacturing. This will not only contribute to the destination countries' employment and reduce resistance to investment, but it should also help to alleviate the trade imbalances that exist between China and some countries.

According to the 2017 Global Report on Chinese Enterprises released by the Center for China and Globalization, major challenges for Chinese outbound investment include political risk, macroeconomic risk, potential labor disputes, obstacles from the destination country's security reviews, and government obstruction. Therefore, strengthening capabilities to assess, manage and respond to such risks is the key to success for Chinese enterprises investing abroad.

For example, Chinese companies can effectively reduce risk by adopting the "clustering" mode of outbound investment to achieve scale advantages. This strategy is reflected in China's program to build overseas industrial parks. By the end of 2016, Chinese enterprises had built 77 overseas industrial parks in 36 countries. Fifty-six of these parks are in countries participating in the Belt and Road Initiative.

At the same time, Chinese companies should seek to climb up the global value chain by improving their capabilities in high value-added activities such as research and development, design, marketing, and services. This will help improve the competitive position of Chinese companies in global networks of value, production and logistics.

The "going out" of Chinese enterprises is also a process by which Chinese standards can be internationalized and Chinese entities can play a more active role in the formulation of global standards. In today's world of evermore intense technological competition, acquiring the influence to shape international standards has become an important indicator of national strength.

Cooperation with multinational corporations from developed markets such as the US and European Union can be a useful accelerator for Chinese companies seeking to expand in third-party countries. Collaborating with multinational companies — some of which have decades or even over a century of international experience — can help Chinese companies reduce the risks associated with cross-border operations.

Finally, when "going out", Chinese enterprises must also pay attention to the training and utilization of international talent. The globalization of Chinese companies will create high demand for internationally oriented talent. However, the current shortage of such talent is a major constraint for Chinese companies aiming to invest overseas, expand international operations, and strengthen internationalized management. To address this shortfall, China should continue to liberalize international talent policy and create favorable conditions to attract international talent. At the same time, companies need to focus on cultivating globally oriented professionals with strong language skills and in-depth industry expertise. This may require that companies review and adjust existing strategies for human resources training.

Outbound investment plays an important role in both the growth of individual companies as well as China's national development. After 40 years of reform and opening-up, China's enterprises and industrial strength have reached a certain level where companies are able to expand internationally under their own steam. At the same time, this expansion will make an important contribution to China's new era development goals and its plan to become a manufacturing powerhouse.

Based on the experiences of multinational corporations from developed countries, in the years to come, we can expect Chinese companies to mature and develop, overcoming various obstacles and ultimately achieve a presence around the world. This global distribution will provide a solid foundation for the Made in China 2025 strategy.

The author is founder and director of the Center for China and Globalization, an independent think tank in Beijing. The views do not necessarily reflect those of China Watch.

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