Chinese firms were expected to invest USD800 billion abroad over the next five years, but their investments were at an immature stage and faced serious challenges, speakers told the China Global Outbound Investment Summit in Beijing. “We anticipate an additional USD800 billion will be invested overseas by Chinese companies from 2012 to 2016,” André Loesekrug-Pietri, Chairman of private equity fund A Capital, said. “The growth of Chinese overseas investments will be 17% per year, double its GDP growth.” China’s appetite for resources pushed its overseas direct investment up by 118% to USD21.4 billion in the first quarter, according to A Capital. Resources accounted for 92% of the first-quarter investment, South America being the biggest recipient with Sinopec’s USD4.8 billion investment in a 30% stake in Petrogal Brasil. Foreign direct investment (FDI) in China used to dwarf China’s outbound investment (ODI), but in the first quarter, outbound investment was only 26% lower than FDI, according to A Capital. Beijing’s goal is for Chinese overseas investment to equal FDI by 2015. “Previously, foreign direct investment was crucial to the success of China. Crucial to the next 10 years is outreach to other countries,” said Michel Wormser, Vice President of the World Bank Group’s Multilateral Investment Guarantee Agency (MIGA). Mergermarket’s Asia Research Manager Shunsuke Okano said that so far this year, China had made 39 mergers and acquisitions (M&A) overseas worth USD16.3 billion. “That is not as high as last year’s USD44.2 billion. At this pace, the total [for the whole of this year] won’t match last year’s,” Okano said. Mergermarket’s data differ from A Capital’s because Mergermarket tracks only M&As, not other forms of investment. China’s overseas investment was smaller than the U.S., France and Germany, but was the fastest growing in the world, Loesekrug-Pietri said. Last year, China invested USD68 billion overseas, but the U.S. led with USD328.9 billion, followed by Germany with USD200 billion and France with USD147 billion, according to A Capital. But, China’s overseas investment was the fastest growing at an annual rate of 54% from 2000 to 2010, the South China Morning Post reports. “Ninety-nine per cent of Chinese companies are not ready to invest abroad … I’m talking about culture and understanding of the world,” said Liu Shaohua, Executive President of the Reignwood Group, a private Chinese conglomerate. “Sometimes, if you acquire a foreign company, you have a grand signing ceremony, then your nightmare begins,” he added. One problem is Chinese companies and their foreign counterparts view contracts differently. Dirk Walker, Partner at China-based law firm King & Wood Mallesons, said that “often the Chinese investor will find the contract an ancillary aspect of the relationship, but the foreign side sees the contract as the entire relationship”. “The Chinese party may misinterpret this as the foreign party not trusting him. The foreign party can misinterpret Chinese post-contract negotiations as reneging on the contract,” Walker said.