JOINT BUSINESS: An employee works at Rigid Global Buildings in Houston, a joint venture established by Hebei Jinhuan Steel Structure Engineering Co. Ltd., a private steel company based in north China's Hebei Province, and Rigid Building Systems, a Houston-based steel building company, in April 2011 (CHEN RUWEI)

India is many things: the second most populous nation in the world; an Asian giant experiencing an economic boom on par with China's; and a hotspot for foreign investment. What it's not is an easy place to set up a business as a foreign company.

Such has been Beiqi Foton Motor's experience in the subcontinent. The Beijing-based automaker signed a memorandum of understanding with India's Maharashtra state government to manufacture trucks in India but the deal has yet to make progress.

"There are too many difficulties in investing in India," said Zhao Yufeng, Assistant General Manager of Beiqi Foton Motor, one of China's leading truck makers, at the 2012 China Global Outbound Investment Summit held in Beijing on June 15.

The land lot the company bought for a new plant was far from construction-ready, he said.

"In China, you buy a plot of land and you can expect it to have access to highways, electricity and water. That's not always the case in India, and then you have to deal with these issues yourself," said Zhao.

The dramatic fluctuation of the Indian rupee poses another challenge. In the second half of last year, the Indian rupee depreciated nearly 20 percent against the U.S. dollar.

China's overseas investment has rapidly increased over the last few years as Chinese companies expand into new markets seeking to develop advanced technology, brand names and natural resources.

Although being honored as the Chinese trailblazers, those outbound investors have to face various risks and uncertainties, or even huge losses.

Going global

China started to encourage its enterprises to invest overseas a decade ago, but the pace has only started to pick up in the past couple of years.

The nation overtook Japan and Britain in 2010 to become the fifth largest global investor and is now the largest investor among developing countries.

Its outbound direct investment (ODI) into the non-financial sector reached $23.16 billion in the first four months, up 72.8 percent from a year earlier, according to the Ministry of Commerce (MOFCOM). By the end of April, its accumulated ODI into the non-financial sector had totaled $345.1 billion.

The vast demand for energy and natural resources motivated Chinese investors to go out, said Li Tong, Executive Director of China Enterprise Forum.

State-owned enterprises (SOEs) represented a record-high 98 percent of all deal value in the first quarter of 2012, compared to 53 percent in the first quarter of 2011, due to the focus on resources, A Capital founder and Managing Partner André Loesekrug-Pietri said.

"SOEs may also show better capacity than private firms to seize opportunities in a volatile and competitive environment," he added.

For Zhao, going global has been a strategy Beiqi Foton has to make amid the looming ceiling of domestic market. "The consumption of commercial vehicles in China will reach its peak in 2020. We need to go overseas to expand our market and balance the books," Zhao said.

According to Zhao, investment in India serves as a key step for the truck maker to implement its strategies and is an important move for its globalization drive.

Increasing trade frictions in recent years also triggered China's ODI to soar sharply.

The nation has been a target of trade protectionism for years and has become even more so recently, driving some Chinese companies to try to avoid trade disputes by investing and opening factories abroad.

Hanergy Holding Group, a Chinese renewable energy operator, announced on June 5 that it agreed to buy the Solibro thin-film unit of German solar panel maker Q-Cells SE to expand in the world's biggest solar market by installed capacity.

The acquisition may help Hanergy avoid an anti-dumping and anti-subsidy investigation into imports of Chinese photovoltaic solar panel launched by the EU in June, reported China United Business News.