Sohu Column about Boao｜Wang Huiyao vs Li Yong: Globalization will not End, Chinese Enterprises Must “Trade Before Investing” When Going Global

Article transferred from Sohu Think Tank

During the Boao Forum for Asia this year, About Boao and Sohu Business School launched “About Boao” and invited Wu Xiaoqiu, Yao Yang, Wang Huiyao, Li Yong, He Dayong, Tian Xuan, Tian Qi, Shen Dou and other heavyweight guests to participate in outdoor dialogues.

This program invited Li Yong, chairman of CHINAYONG Investment Group, and Wang Huiyao, founder and chairman of Center for China and Globalization (CCG), to discuss topics of public concern such as economic development, globalization trends, and enterprises going global.

Wang Huiyao believes that globalization will not come to an end, and no country can immune to the problems, so we must face it in a globalized way. “China is just now starting to lead globalization. We account for more than 30% of global economic growth and are the world largest trading nation.”

Regarding whether China can seize the opportunity in the process of globalization and digitalization, Wang Huiyao pointed out that if China wanted to become the world innovation leader, it must seize the opportunity in global talent flow, capital flow, data flow, and global technological innovation and must recruit talents from all over the world. If China remains open, it will play a bigger role in the global economy.

As the world second largest economy, Chinese enterprises have become one of the most dynamic and internationally competitive subjects under the trend of globalization. What issues should Chinese enterprises pay attention to when investing abroad? In this regard, Li Yong said that Chinese entrepreneurs should fully conduct research on conditions of the invested country. “Our normal practice is to trade before investing in a country we know few to reduce risks.”

In this respect, Li Yong said that it was necessary to make full use of local social forces, including local overseas Chinese businessmen, local social organizations, and embassies. Only with the help of these powerful levers and crutches, can additional investment be made after familiarizing with the situation. In addition, Li also stressed that when investing abroad, you should also pay attention to the culture and customs of invested country, and carefully understand them before investing.

The following is a summary of the conversation:

Sohu Finance: Globalization is the most controversial issue in the political economy of the contemporary world. Will anti-globalization become a mainstream trend? How do you view the current globalization trend?

 Wang Huiyao: Globalization will not end, because we are already living in an era of globalization. There are 8 billion people in the world. In the past, we might have been scattered on the ocean, and each country was an independent ship. But in fact, we are all in one big ship, that is, we are all on the earth. So, issues like global poverty and epidemics, especially climate change, are global problems, and no country can be immune to them. We must deal with them in a global way, including global operations of multinational companies.

 In fact, China has benefited from globalization. When multinational companies come to China, China has developed. Chinese enterprises also need to go global. The “Belt and Road” is a vivid manifestation of globalization. Moreover, China is just now starting to lead globalization. We account for more than 30% of global economic growth and are the world largest trading nation. More than 140 countries are China’s largest trading partners. China needs to maintain openness and promote the wave of globalization.

There are certainly several waves of globalization, and we are just in one of them. Although there may be countercurrents and anti-globalization, the general trend of globalization is unchangeable.

Li Yong: Anti-globalization is just something that Western developed countries led by the United States are doing, and it no longer promotes the multilateral system. But in reality, it is not yet possible to turn the world around.

Sohu Finance: Can China seize the opportunity in the process of globalization and digitization?

Wang Huiyao: China still has many weaknesses in the process of globalization. For example, in terms of scientific and technological innovation in globalization, from 1 to 100, we have a great advantage, while from 0 to 1, we are in a weak position. But from 0 to 1 is often crucial and is a decisive thing.

chatGPT is used in all English-speaking countries, and it is mostly in English. Of course, we have a Chinese world, while, English is the common language in the world. Chinese is not yet the common language, if China wants to seize the opportunity in global talent flow, capital flow, data flow, and global technological innovation, and become the world innovation leader, it must recruit talents from all over the world.

Sohu Finance: During your communication with different institutions around the world, which issues are they most concerned about in China?

Wang Huiyao: During the pandemic last year, we were the only Think Tank that visited 6 countries for 30 days and conducted almost 100 activities. We met many people, including foreign officials, experts in industry, academia, and research, and even government officials. Their current concern is, firstly, that they really want to come to China. After three years’ absence, they feel strange to China, because their understanding of China has not been updated, and they have not obtained new content and new information.

 Secondly, after the rapid opening up of the epidemic, a series of high-end forums such as the China Development Forum, Boao Forum, and Davos, including the Canton Fair, the China International Import Expo, the Service Trade Fair, and the Hainan International Expo, have played a huge role this year, all of which are key to China.

Now the problem is that we don’t have enough flights and visa processing is slow. We hope a large number of people will come to China. The best strength of China is to allow these people to easily resolve their doubts about China after seeing it. It is better to see once than to hear a hundred times.

 Many foreigners’ suspicions of China, confidence in China’s economic development, position on China’s geopolitics, and understanding of the current living conditions of the Chinese people can only be greatly changed after he has visited China. So now we are just debating from a distance, just talking over each other in the media, not to each other. There was no face-to-face conversation, which was very inconvenient for us.

At present, the aspects that can best showcase China’s unique development advantages and soft power have not been given full play during the pandemic, and now it is time to make greater use of it. However, we need to increase the number of flights and speed up the visa application process. We need to open China’s door wider and let more international friends come to China.

Sohu Finance: Recently, the collapse of a bank in Silicon Valley has attracted global attention. How do you view this, Mr. Li? What kind of impact may it bring in the future?

Li Yong: Silicon Valley Bank is just the beginning. According to our public information or inquiries about this matter inside, there are nearly 200 banks in the United States that may have problems. This includes the close-down of Credit Suisse, which was caused by Silicon Valley Bank. So, the entire financial industry in Western countries was severely damaged in the last few days, and the biggest problem is confidence.

Secondly, the AT1 bond worth 15 billion Swiss francs has been cleared to zero, which has caused a huge uproar in the world. Because we know that debt generally takes priority over equity. I happened to meet the Global Wealth Chairman of Swiss Bank in Hong Kong a few days ago. I was a major client of Swiss Bank in China, so he was very sensitive at the time. He was afraid that Chinese clients would also withdraw. He told me that many Chinese entrepreneur clients are confused because many of the debts are from private banks or institutions in Asia. This matter has a great impact on everyone, including what will happen after UPS acquires it? We all hold a wait-and-see attitude.

Nowadays, in Western countries, both the financial system and the overall economic order are in great trouble. The issue of inflation has become increasingly serious, and the interest rate rise in the United States has caused many negative effects. So, we still need to focus on the domestic large market. The domestic and international markets are two cycles, and Chinese entrepreneurs must be cautious when investing abroad.

Sohu Finance: What role can China play in the global economy?

Wang Huiyao: The global has great expectations for China is very high, because the Chinese economy has become the second largest in the world, with a contribution rate of over 30% to the global economy. China is also the largest trading partner of more than 140 countries in the world. With its economic strength, naturally, many Western countries and European countries expect China to play a greater role.

Wang Huiyao (question to Li Yong): Mr. Li, you are working on the Diplomat Economic Forum and building a platform for enterprises to go global. What do you think of this issue?

Li Yong: Chinese entrepreneurs have been investing abroad for so many years, and we have made many contacts with them. We also invest abroad. In many cases, we blindly go out and do things abroad according to some domestic ideas before fully conducting research on the conditions of the investing countries. Therefore, our normal practice is to trade before investing in a country we don’t know very well to reduce risk.

Secondly, it is necessary to make full use of local social forces, including local overseas Chinese businessmen, local social organizations, and embassies. With the help of these powerful levers and crutches, additional investment can only be made after familiarizing with the situation.

Thirdly, geopolitics is a very important issue. We can see this through the sanctions imposed by the United States and Europe on Russian entrepreneurs. For Chinese entrepreneurs, this is also the key thing to learn from. We should think about geopolitics, especially this year.

In addition, when investing in local areas, we should not ignore the local culture. We should also pay attention to the culture and customs of the countries we invest in, and carefully understand them before investing.

Li Yong (question to Wang Huiyao): You are the chairman of Globalization Think Tank. In today’s complicated situation, regardless of the political and economic situation, we believe that Think Tank’s power will grow and it will play a bigger role. What kind of cooperation can Chinese entrepreneurs have with Think Tank in the process of globalization or investment?

Wang Huiyao: Think Tank is now the government, industry, universities and research institutes. We can provide a good reference for enterprises to go global, especially in terms of policy suggestions. We usually have a wide range of contacts, including diplomacy, economy and geopolitics. We have participated in many international forums and conferences. We can help Chinese enterprises to evaluate the situation and analyze risks to better go global.

We have a cross-company communication mechanism, and we also have a globalization forum every year. In the future, we can communicate with each other and cooperate more to help Chinese enterprises better go global.

Sohu Finance: What suggestions do you have for Chinese companies to go global?

Wang Huiyao: Chinese enterprises should seize the great opportunity of China’s rise and development. In particular, we may become the world largest digital economy in the future. We should make great strides in our digital economy, including infrastructure, clean energy, and also bring out China’s culture, cuisine, and tourism to the world. In the future, China’s going global is in the ascendant. We also have a broad Belt and Road. China will certainly play a bigger role in global cooperation.

Li Yong: Considering our characteristics and our own situation, if I need to say a word to my friends, it is that, especially this year, under such a complicated geopolitical situation, Chinese entrepreneurs should be cautious when they go out to invest.