More Chinese Overseas Direct Investment urged

By Ding Qingfen, Tang Zhihao and Wei Tian   (September 7, 2011 9:29 PM)

XIAMEN, Fujian province - A larger outflow of Chinese overseas direct investment (ODI) could help the global economy regain and sustain its growth momentum, even as uncertainties remain over the strength of the global recovery, said officials from both China and overseas.

"The deeper impact of the global financial crisis has expanded, and new uncertainties about the world economic recovery constantly appear," said Chen Deming, the Chinese minister of commerce, at the opening ceremony of the 15th China International Fair for Investment & Trade (CIFIT) on Wednesday.

"The enhancement of international cooperation and encouragement and support for Chinese ODI would be an effective way of adding vigor to the global economy and help to achieve robust, sustainable and balanced growth," said Chen.

Held in Xiamen, the five-day investment fair has attracted 636 international organizations and 482 high-profile visitors from foreign governments, companies and institutions.

Also on Wednesday, three Chinese ministries, including the Ministry of Commerce, released the 2011 industrial guidelines on China's Overseas Investment. The guidelines, which have been renewed annually since 2009, cover 115 foreign countries and include detailed regulations and information about each nation. The aim is to help Chinese companies invest in a more sustainable way, according to a statement on the commerce ministry website.

On Sept 6, the United Nations Conference on Trade and Development predicted that 2011 global economic growth would decline to 3.1 percent from 3.9 percent in 2010. Growth for the United States is predicted to be 2.3 percent, for the European Union it is 1.9 percent, while for Japan the figure is minus 0.4 percent. Meanwhile, Chinese growth is seen at 9.4 percent, while the figure is 8.1 percent for India.

While the global economy is troubled by debt crises and speculation abounds concerning a double-dip recession, Chinese investment is becoming increasingly important for the world. Participants at CIFIT welcomed the investment, believing that it may boost economic growth.

Bilateral trade between China and India is expected to reach $100 billion by 2015 from $62 billion in 2010, but "we also expect to increase the investment. We expect to attract Chinese companies to invest in India," said Indra Mani Pandey of the Indian Consulate General.

Pandey said Chinese companies are welcome to invest in sectors such as infrastructure, automobiles, energy and machine making.

This is the first time that India attended the fair. "CIFIT is an important platform for India to seek opportunities for cooperation with Chinese companies," Pandey said.

"Many of them (the companies) do not know the investment environment and how to benefit from it. We have to convince them that we have the technological manpower and a vast consumer market."

Wang Shengwen, deputy director-general of the Department of Outward Investment and Economic Cooperation at the Ministry of Commerce, said that the growing debt crises will provide Chinese companies with a great number of foreign investment opportunities during the next two decades.

"Developed regions, including the US and the European Union, Australia and emerging markets" very much welcome China's investment, said Wang.

"We expect to see more investment from China, because Algeria is the largest market in Africa by population," said Safia Kouiret, assistant to the director-general of the Algerian Ministry of Industry and Investment Promotion.

Algeria plans to allocate $286 billion to attract overseas investment in a number of projects, including the construction of highways, schools, medical centers and airports. "Chinese investment is very important for us and our experience as a growing economy during the past three decades" needs to be understood, Kouiret said.

Together with countries such as Sudan, Algeria is a top African destination for Chinese overseas investment. "Chinese investment means discipline, quality and an interesting price," she said.It's not only about emerging markets, as those from developed economies have also voiced their enthusiasm.

"If Chinese companies invest in Lithuania, they are investing in the European market. This is our value to Chinese companies," said Rimantas Zylius, economy minister of the Republic of Lithuania.

"The Chinese economy is ready to go outside, we believe we can benefit from China," he said, adding that Chinese companies are welcome to invest in high-tech industries such as pharmaceuticals.

While the developed economies have expressed an interest in Chinese investment, they have also set up barriers in some cases. However, according to Zylius: "What is important is that China is opening up and European countries are investing in China. It is important that Chinese companies get the same treatment in Europe as European companies receive in China."

In 2010, China overtook Japan and the United Kingdom to become the world's fifth-largest overseas investing nation as the volume of investment surged by 21.7 percent to $68.8 billion.

Regions including Oceania and EU have witnessed the most rapid investment growth in the past few years, although the Asia-Pacific region and Latin America are the top two in absorbing Chinese investment by volume.

As "the biggest construction site in Europe, Poland will see record Chinese investment this year", despite initial failures, said Andrzej Pieczonka, first counsellor at the Polish Consulate General in Shanghai.

It looks like Bright Foods has finally succeeded in an overseas acquisition. A key strategy is to build perception of quality at home by owning western companies - this also will work for the Flavor & Fragrance industry equally.

Bright Foods announced the acquisition of Australian manufacturer Massanen Foods this week. This, combined with speculation that it has shown an interest in a number of other international players hints at the scale of its plans. What exactly are Bright Foods' ambitions? Dean Best reports. By: Dean Best - 19th Aug 2011 just-food

For some time, there have been indications that Bright Food, China's state-backed food and beverage company, wants to be a force on the world stage.
If reports over the last 12 months are to be believed, China's state-backed Bright Food, keen to expand overseas, has held talks or lodged an interest in some of the best-known food makers in the West.
UK-based snacks group United Biscuits, yoghurt giant Yoplait and US vitamin retailer GNC are all said to have been on Bright Food's radar but, for one reason or another, no deals were made.
Bright Food did succeed with one transaction, the acquisition of a majority stake in New Zealand dairy firm Synlait in July.
Nevertheless, the failure to close a deal for UB, Yoplait and GNC, plus its defeat in the battle for Australian sugar processor Sucrogen, has raised questions about the seriousness of Bright Food's ambition - and its ability - to expand overseas.
However, the announcement Wednesday (17 August) that Bright Food had secured a 75% stake in Australian food producer and importer Manassen Foods could quieten the doubters. The deal, struck for an undisclosed sum but reported to value Manassen at A$500m, is Bright Food's biggest foray outside China.
Bright Food chairman Wang Zongnan pointed out the "synergies" the deal - which remains subject to approval from Australia's foreign investment regulator - could bring. Both companies, he said, could benefit from taking their products into the companies' respective domestic markets.
Whether Australian consumers would be ready to buy, for example, Chinese dairy products is debatable, given the recent food safety scares in the country. However, China provides acquires in place.
"Any company I am going to acquire must have an outstanding management team and I want that team to continue working for us because Bright has insufficient knowledge of international markets," Wang said.
For all the headlines around Bright Food's interest in the likes of UB and Yoplait, the Manassen and Synlait deals, opportunities for Manassen, not least, ironically, in dairy. Manassen, which is the distributor in Australia for brands owned by food makers in Europe like Premier Foods plc and Arla Foods, also has its own brands, including products under The Margaret River Dairy Company label. China's food scandals have also had an impact at home; concerned about safety, wealthy consumers have increasingly sought out imported dairy products.
Roy Manassen, the son of the company's founder, certainly seemed upbeat about the potential for Manassen in China and, he said, in Asia, too. "Our backyard has just grown significantly and we have the opportunity to make a major contribution into the most exciting region on the planet. I am very pleased to be part of it," he said.
Mr Manassen and other executives in the Australian company will keep a stake in the business and likely to be retained by Bright Food. Earlier this year, Wang told The Financial Times that he plans to keep the existing management teams of any companies Bright Food should, according to one industry consultant in China, help the company more effectively build its understanding of overseas markets.
"Acquiring a smaller brand in a more bounded market may make it easier to learn how to integrate a non-China based and owned-entity into the group, instead of going through that process with multi-category, multi-country business," Torsten Stocker, partner at management consulting firm Monitor Group's Shanghai office, tells just-food.
However, Stocker believes that, ultimately, Bright Food's ambitions reach beyond Asia-Pacific. He says the company wants to see a "significant increase in revenue". In 2009, Bright Food's turnover was CNY76bn, Stocker says and, by 2015, he claims the company wants sales of CNY110bn.
"From what I understand, they want to become a major food and beverage player globally, covering the full value chain, from basic resources to retail," Stocker says. "My sense is that they view themselves more as competing with a Nestle rather than with other Chinese players focusing on China only."
Manassen could be the latest in a line of acquisitions by the Shanghai-based, state-owned group. Bright Food's mettle has been tested by its failed pursuits of companies in Europe and the US but, by finding success close to home, they could find the ingredient to success further afield.

    

WB chief warns China of 'middle income trap'

The lasting legacy of China's development will be to eventually break into the High Income Group - Imagine China like 10 Japans in the global econonmy.


chinadaily.com.cn (September 1, 2011 9:04 PM) WASHINGTON - China's economic growth has been a source of strength in the crisis, but the nation also needs structural changes to stave off a "middle income trap", World Bank President Robert Zoellick said Thursday.

The world's economic leaders need to "rebalance" their thinking as well as their economies. Fiscal and monetary policies have dominated the current discussion. That makes sense to a degree, but these policies are "insufficient for sustained growth", Zoellick cautioned in an op-ed published on the website of the Financial Times Thursday.

"We need action on the structural dynamics to generate jobs, higher productivity, and a sustainable long-term rebalancing. What happens in China is as important as Europe, Japan, or the United States," said the World Bank chief.

For the past three decades, China has enjoyed average annual growth of about 10 percent. By 2030, if China reaches a per capita income of 16,000 U.S. dollars, a reasonable possibility, the effect on the world economy would be equivalent to adding 15 of today's South Koreas, he noted.

Zoellick is scheduled to visit China from on September 1-5 to discuss China's key medium-term challenges, his fifth official visit to the country since becoming the head of the Washington- based bank in July 2007.

"It is hard to see how that expansion could be accommodated within an export and investment-led growth model, so China will need to rebalance through boosting domestic demand, lowering savings and increasing consumption," he said in the article entitled "The big questions China still has to answer".

"In the longer term, the drivers of China's meteoric rise are waning: 

resources have largely shifted from agriculture to industry; as the labor force shrinks and the population ages, there are fewer workers to support retirees; productivity increases are declining, partly because the economy is exhausting gains from the transfer of basic production methods," he said.

Zoellick noted that China's policymakers are well aware of " what" 

they need to do, as their 12th Five-year Plan points the way. Their current challenge is "how" to do it, and China's Development Research Center of the State Council, the Ministry of Finance and the World Bank are making joint efforts to turn "what" into "how" for a report later this year.

In an interview with Xinhua Tuesday on the eve of his trip to China, Zoellick held that other countries can also draw some lessons from China's experience on how to avoid the middle income trap.