Advanced technology constitutes another alluring feature for Chinese investors.

"We want to buy up advanced technology," Jason Chow, CEO of Hanergy Global Investment & Sales, said at the summit.

For Chow, the ongoing EU debt crisis and weak recovery of the U.S. economy accelerated his company's ambitions to expand abroad.

"Since September last year, we have been looking for acquisition opportunities in Europe and the United States. Their gloomy economy has put us in a good position to invest," said Chow.

China's ODI could hit $2 trillion by 2020, with the private sector playing an important role, according to a report by U.S.-based research firm Rhodium Group.

"The strong demand for energy and natural resources and the over-reliance on overseas markets will be the most powerful engine of its ODI in the next decade," said Li.

China has established various funds to help its companies invest overseas. They include the China-Africa Development Fund and the China-ASEAN fund. State-owned banks have provided them with some of their capital.

According to the MOFCOM, a fund will be established to help Chinese companies invest in Latin America. The fund is due to begin operating this year.

The State Administration of Foreign Exchange (SAFE) issued a document that allows domestic enterprises to inject foreign currency-denominated loans they receive in China into their overseas subsidiaries, effective on July 1.

Previously, companies could only finance their overseas firms with foreign currencies generated by their own business operations, purchased with the yuan, or from other foreign capital pools approved by the SAFE, according to regulatory rules published in 2009.

Boom or bane?

Although China's ODI has been surging in recent years, it did not produce a corresponding increase in profit.

A report published by consulting firm Mckinsey & Co. found that some 70 percent of mergers fail to achieve expected revenue synergies.

In July 2011, Aluminum Corp. of China announced that it lost 340 million yuan ($53.97 million) at its bauxite project in the Australian state of Queensland. In June 2011, China Railway Construction Corp. Ltd. reported a loss of 4.1 billion yuan ($650.79 million) from a light railway construction project in Saudi Arabia.

"The losses disclosed are just a tip of the iceberg. The actual loss is much bigger than the number we know," said Jin Jian, a partner at U.S. auditing firm Deloitte Touche Tohmatsu, at the summit.

According to Wan Meng, Dean of Law School of the Beijing Foreign Studies University, more than 70 percent of the Chinese enterprises that have invested overseas suffered losses.

"Half of China's ODI will be lost over the next five to 10 years," according to Hua Liming, former ambassador in the Middle East and a researcher at the Chinese Institution of International Studies.

The main reason for the severe losses is a lack of "soft power," though China's economic might has increased in the past few years.

"Outbound investors generally lack the ability to operate internationally and have little understanding of the local law and business environments," Hua said.

"Many Chinese enterprises think that they are able to buy anything because they have money. Actually, they don't know what they should do after an acquisition finishes," said Jin at the summit.

"The predominating and the only advantage of Chinese investors is access to capital," said Frank Xu, Managing Director of Investment Banking Department of China International Capital Corp. Ltd.

Cultural differences are the major obstacle for Chinese enterprises to achieve their expected aim in overseas investment, said Jin.

"Every country has its own underlying rules. We need to fully understand those rules and adjust ourselves to them before we can effectively proceed with our project," said Zhao.

"Overseas investment involves too many factors, including politics, culture, finance, taxation, environment, talent, corporate strategy, etc. Ignorance of any factor may lead to failure," said Li.

Lack of professional management talent also poses another major challenge.

"Talent is the pillar of successful cross-border M&As. It is always harder to have an experienced managerial team than just buying a foreign enterprise," said Jin.

"For Chinese investors, ODI is a very recent phenomenon and in its beginning stage, and they are suffering from a lack of experience and managerial know-how," said Li.

Email us at: liuxinlian@bjreview.com