(Yicai) Nov. 17 -- Globalization 2.0 will present more investment opportunities in China as the country’s businesses shift toward the upper end of the industry chain, Drew Chen, a private equity partner at Bain Capital, said in a recent interview with Yicai.

Globalization 2.0 will become the main investment theme over the next 10 to 20 years, mostly featuring supply chain diversification, Chen said. From the perspective of US-based investment firm Bain, the most appealing opportunities are Chinese firms that can capitalize on this new phase of globalization, he added.

China has made rapid progress in transforming its industrial structure toward higher-value manufactured goods, following capital accumulation, technological upgrading, and a flourishing export-oriented processing trade, Chen pointed out. For example, the rise of China's new energy vehicle sector has been a result of local firms building their globalization capabilities in recent years, he said.

China has overtaken Japan to become the world's biggest auto exporter, powered by NEV exports. In the first 10 months of this year, Chinese auto exports jumped 60 percent to 3.9 million units from a year ago, with NEV exports up 99 percent to 1 million, according to data from the China Association of Automobile Manufacturers.

Among the next steps required by Chinese firms in their further expansion overseas are a better management level, the setting up of global operating platforms, and more agile judgment and flexible response geopolitical changes, Chen noted.

As one example of a successful investment in China, Chen mentioned Bain’s acquisition of data center operator Chindata Group from Shanghai-based Wangsu Science & Technology in 2019. It then combined the group with its Bridge Data Centres, and Michael Foust, BDC co-founder, became chairman of the combined entity and helped with Chindata's Nasdaq flotation in 2020.

Chinese bosses usually have advantages in terms of boosting company efficiency while foreign executives are more sensitive to overseas markets, Chen said. Collision between these two styles could dent efficiency, but the combined benefits could be beneficial overall, he noted. 

The path to overseas expansion is getting more complicated for Chinese businesses, Chen noted, but shift remains a key way for industries to seek a second growth curve. Getting a firm foothold and integrating into local communities will be their primary tasks for a long time to come, he said.

Editors: Dou Shicong, Tom Litting