Chinese Overseas Mining Investment:
Part 4 of 4: Recommendations
If the ambitious plans of “One Belt, One Road” are to succeed, Chinese companies cannot simply come into a neighboring country, grab minerals, and get out. Trust needs to be established for cooperative development. At AsiaPacificMiningFinance.com, we believe that the strategies of win-win cooperation are not only a social responsibility, but are the strongest guarantee for long-term sustainable profitability. Chinese companies that have led a successful mining project can be said to have fulfilled four major requirements in the early stages:
1) Raising venture exploration funds and having their plan endorsed in the wider capital market
2) Confirming the presence of a suitable volume of resources
3) Profitably transferring mining rights
4) Researching investment schedules and production costs – accounting for a wide range of local factors – to conclude a project is viable.
Meanwhile, companies that have accomplished these factors are further characterized by the vision and patience to engage with their hosts on a respectful basis. For investors who want to know more than whether a Chinese company has had a successful project in the past, these are traits that are easily verifiable:
1) Does the Chinese company have experience partnering with local companies?
2) Does the Chinese company have a track record of positive engagement with local communities?
3) Has the Chinese company invested in eco-friendly mining technology development and mine safety reforms?
4) Does the Chinese company have a coherent plan for the minerals it seeks in different countries, as they fit into the needs of the Chinese and regional economies?
In effect, foreign investors have an advantage over Chinese investors in evaluating a Chinese company’s ability to succeed abroad, because they can personally evaluate that company’s ability to cross-culturally engage with them. Self-consciously forging closer ties with Chinese companies, meanwhile, is a strategy to ingratiate and influence. Shared cooperation means compensating strengths and higher profits.