How to Gauge a Play for Natural Resources

Chinese companies have made many overseas investments in natural resources over the past few years. Lessons can be drawn by reflecting on the recent investment activity.

The most important consideration for overseas investments in natural resources should be the return on profits. Investments made primarily with the consideration of securing resources for national security objectives should be carefully assessed. Fu Chengyu, the chairman of China Petroleum and Chemical Corp. (Sinopec), summed up the pragmatic attitude best when discussing the company's objectives during an interview with media in 2012: "The oil market is open; we can buy oil as long as we have money and thus our goal is to make money."