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China Listed as No. 1 in Attracting FDI
(September 24, 2002) China has become the most attractive FDI nation, surpassing
the United States for the first time, the latest survey result shows.
The world-renowned consulting company A.T. Kearney announced the result from the
survey of the Foreign Direct Investment (FDI) Confidence Index Monday.
It indicates that while most nations' power to attract investment is in decline,
China's continues to grow. Increasing numbers of investors are expressing
interest and confidence in the Chinese market.
Several factors contributed to China's number one position, include its populous
market, continued economic growth, stable political situation, sound investment
environment, WTO membership and successful bid for the Olympics, said Paul A.
Laudicina, managing director of global business policy council of A.T. Kearney.
He said China has become the first choice for global manufacturers because they
have strong confidence in China's raw materials and skillful personnel.
In addition, China's enormous potential in the finance, service,infrastructure,
telecommunications, wholesales and retail industries will also attract a great
deal of foreign capital.
Laudicina said that, by 2005, half of all new 10,000-US dollar annual salary
earners will be Chinese, noting that strong buying power is another factor for
FDI flow.
The A.T. Kearney official added that China is not only a recipient of FDI, but
also an investor.
Last year, the top 12 Chinese state-owned enterprises invested 30 billion
dollars in foreign countries, an amount equivalent to the entire investment made
by Latin America. Many Chinese small- and medium-sized companies also made
investments in over 40 countries.
In order to maintain its advantage, China needs to strengthen infrastructure
construction and promote the balance of local economy, he said.
Sources: People's Daily
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WTO Brings Foreign Retailers Bigger Market Share
(September 25, 2002) Competition among foreign retailers in China has heated up
since China entered the World Trade Organization (WTO) nine months ago.
According to a survey by the State Economic and Trade Commission (SETC),
foreign-funded firms now account for 23 percent of the large-sized supermarkets.
Such multi-national retailers as Wal-Mart and Carrefour have already earned a
solid market and growth potential in China as their chain stores offer roughly
60-70 percent of the food and daily necessities for residents in China.
The SETC predicts that the multi-national retailers will expand their operations
to all parts of China within the next 12 to 24 months.
The pace for overseas retailers entering the Chinese market has accelerated
since China joined the WTO last November. In the first half of this year, all
foreign companies winning access to Chinese market were either in the top 500 of
the world or were top guns in Taiwan and Hong Kong. Among the 28 stores newly
opened in China, 24 are large-sized super markets with a shopping area of more
than8,000 sq m each.
Multi-national retailers have become the forerunners in expanding market shares
in China so far this year, said Huang Hai, director of the Trade and Market
Department of the SETC.
Fierce competition has led to a thinner profit for commodity distributors in
China than the rest of the world. The SETC estimated that the net profit rate of
Chinese supermarkets was around two percent in 2001, much lower than the greater
than 3 percent ratio of the world-famous Wal-Mart.
Only the financially strong multi-national companies can sustain a low-profit
expansion during the first few years of entering the Chinese market, according
to Huang.
Such retailing giants as Carrefour, Groupe Auchan and JUSCO entered China
several years before the country joined the WTO. Having taken root in the
relatively affluent east, they are now expanding into western parts of China. In
the first half of this year, Carrefour opened three new joint-ventures in
Changsha, Chengdu and Kunming cities in central-south and southwestern areas.
Opening the distribution industry to foreign firms represents part of China's
WTO commitment to open up its service trade. So far, China has proceeded faster
than the WTO timetable by opening scores of big and medium cities to foreign
retailers.
As the Chinese economy sustains a fast growth and retail sales surged 8.6
percent in the first half of this year, foreign retailers increased their share
of the market. In Beijing and Shanghai municipalities, the ratio of foreign
retailers' sales to the total sales of large- and medium-sized local retailers
increased by 0.5 and 2.7 percentage points respectively.
Source: Xinhua News Agency
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Economists Advise Foreign Businesses to Stay Put in China
(September 04, 2002) Business leaders attending a major economic conference were
encouraged to keep their capital and investment in China Wednesday due to
China's outstanding cost- effectiveness when compared to some other Asian
countries.
Business leaders attending a major economic conference were encouraged to keep
their capital and investment in China Wednesday due to China's outstanding cost-
effectiveness when compared to some other Asian countries.
Christopher Nailer, the Singapore-based regional economist of the Economist
Corporate Network, told 100 business leaders attending the final day of the
Regional Strategic Forecast in Hong Kong that China is one of an extremely few
countries in Asia, that are enjoying a high level of cost-effectiveness.
So despite worldwide economic recession, they should still keep their production
bases in China, he said. "Make sure you don't close a China factory," he said.
Also, China is a place providing economic stability for investors and
businessmen and shield them against the worldwide recession caused by sluggish
economic growth in the United States, Europe and Japan, he said.
"China's demand is now central to Asia.... In the next 24 months, look out for
some of the domestic and regional economies' de-linking from the US economic
cycle, especially China," he said.
Source: People's Daily.
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China's SMEs Seek Venture Capital
(September 25, 2002) Fast-growing small and medium enterprises (SME) in China
are seeking venture capital from abroad in an effort to expand channels of
financing.
During the five-day China International SME's Commodities Fair which closed
Tuesday in Changzhou, in east China's Jiangsu Province, 100 tech-heavy start-ups
from China's prosperous Yangtze River Delta region held intensive consultations
with representatives from international venture capital investors.
Apart from seeking financing, these SMEs, which are currently engaged in
software, telecommunications, new materials and biomedicine, have also shown
interest in market networks, technology and management improvement during the
fair.
Zhu Ruiqin, chairperson of the Changshou Cailang Technology Development Co.,
Ltd, said due to marketing problems, 90 percent of her enterprise's products,
though innovative, have not yet entered the market.
"We hope international venture capital can present more opportunities for us to
cooperate with big companies," Zhu said.
Li Jianguang, partner of the US-based IDG Technology Investment Fund, said after
the fair, he has more confidence in the development of this region and will
treat it as the Fund's major investment site.
SMEs, recognized as the driving force of China's economy, currently face the
challenge of inadequate funding sources. The Chinese government has introduced
venture capital to support their expansion.
Sources: Xinhua News Agency
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Logistics Sector Shows Great Potential
(September 25, 2002) China's logistics sector has a bright future, according to
over 100 high-ranking business people attending Tuesday's China Supply Chain and
Logistics Roundtable.
Lois Dougan Tretiak, organizer and vice-president of Economist Conference, said
that China's economy keeps growing with an annualrate of seven percent, which
greatly stimulates the demand for logistics.
China's accession to the World Trade Organization will also increase its import
and export and bring new opportunities to the logistics sector.
The influx of foreign capital and multinational logistics enterprises in the
Chinese market will prompt China to meet the practice worldwide, and modernize
the country's logistics, said Men Xiaowei, a senior economist with the State
Economic and Trade Commission.
Lowering costs and strengthening competitiveness have become the internal
driving force for China's logistics sector. The development of e-business will
also take logistics to a new level.
With the influx of foreign capital into China, the part of logistics market
which serves foreign-funded and non-governmental companies will be the first to
make progress, Men said.
Yang Qing, an official with the Cummins Corporation, said China's strategic
development of its western regions will generate an increase in merchandise
exchange among China's western, central and eastern areas.
Sources: Xinhua News Agency
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Shanghai to Launch 10 More IC Production Lines
(September 17, 2002) China's total market demand for integrated circuits (IC)
will allow Shanghai to establish 10 more IC production lines, officials of the
Shanghai IC Industry Association revealed at yesterday's forum held during the
1st Pudong Innovation and Incubation Week.
Zou Shichang, chairman of the IC Industry Association, said: "In the next five
years, the growth rate of the IC sector for the whole country is expected to be
about 30 per cent year-on-year, while the nationwide market size is expected to
more than double."
According to Zou's estimate, the total revenue of the IC sector will add up to
330 billion yuan (US$39.76 billion).
In comparison, China's IC sector turned out 120 billion yuan (US$14.46 billion)
worth of IC boards in 2001, 60 percent of which are produced by IC manufacturers
in Shanghai.
However, the officials of the IC Industry Association also pointed out that at
present, over 85 per cent of nationwide revenue from the IC sector is generated
by technologies owned by foreign investors.
"Lack of key technology and intellectual property rights is currently the
bottleneck for developing our own IC sector in the city," said Zou Shichang.
He added that a majority of the local IC manufacturers only package and assemble
the imported components and devices, with profits depending heavily on the
current low labour cost and Shanghai IC companies do not have much core
competitiveness.
The association is urging the municipality to encourage more local firms to
develop self-owned intellectual property rights.
Source: China Daily
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