Interesting article that makes a lot of sense as Chinese entrepreneurs look overseas to expand their empires as well as keep some assets overseas as a hedge for the future.
By Cai Xiao
China Daily
BEIJING - Chinese commercial banks should prepare to manage offshore wealth to meet the demands of the rich overseas, according to a report released on Thursday.
The report, carried out by the Boston Consulting Group and China Construction Bank, also said the value of China's individual investable assets will come to 62 trillion yuan ($9.8 trillion) by the end of 2011.
The report was compiled from the results of a survey conducted among more than 2,000 wealthy respondents - technically deemed high-net-worth (HNW) individuals - and from interviews conducted with various private-bank relationship managers.
Of the total amount of individual investable assets, about 27 trillion yuan (44 percent) came from the type of households polled in the survey. There is expected to be about 1.21 million such households this year, an increase of 42 percent over the past three years.
According to the report, 35 percent of wealthy Chinese are in Beijing, Shanghai and Guangdong. Wealth is also spreading rapidly to places such as Shanxi and Hainan provinces, which are rich in natural resources.
Nearly 60 percent of wealthy Chinese are entrepreneurs who made their money by starting their own businesses. Many of them have taken to looking to expand their endeavors abroad.
According to the report, private enterprises contribute about one-third of the total value of China's trade. In the first three quarters of 2011, they generated about $739.4 billion in trade, up about 40 percent from the same period a year earlier.
"As more and more Chinese entrepreneurs expand their businesses abroad, Chinese commercial banks should now start preparing to manage wealth offshore," said Wei Chunqi, general manager at China Construction Bank's wealth management and private banking department.
The report said Chinese commercial banks could test out wealth-management arrangements in Hong Kong, which has well-established legal, accounting, and regulatory systems.
"There are three ways a Chinese commercial bank can set up an offshore wealth-management arrangement: Setting up its own branches overseas, acquiring a financial institution abroad or establishing a joint-venture company with a foreign institution," said Wang Nan, a principal at Boston Consulting Group and a chief author of the report.
Wang said the demand for offshore products increases with wealth.
Of those with more than 50 million yuan in assets, 22 percent have already used offshore products and services. Of those with more than 300 million yuan in assets, about 70 percent expect to see more exposure to offshore products and services in the future.
"Security and privacy were big considerations for me when I was choosing a wealth-management agency," said Xiao Baiyou, at Outlet China Ltd, which develops, operates and invests in outlet malls in China.
Xiao said many wealthy Chinese want to have their wealth managed in Singapore or Northern Europe, both places believed to have good legal, accounting and regulatory systems.
Ji Ran contributed to this story.
China Daily
Friday, January 6, 2012
Sunday, January 1, 2012
COFCO plans to expand global logistics system
COFCO certainly has the clout and ambition to become a global player against the likes of Cargill and ADM - their farm to fork strategy indicates more than just commodity food staples too.
 A China National Cereals, Oil and Foodstuffs Corp (COFCO) booth at an exposition in Beijing. As China's largest State-owned agricultural company, COFCO is seeking to expand overseas more rapidly. [Photo / China Daily] |
Deals being negotiated and total spending could be substantial
BEIJING - China National Cereals, Oil and Foodstuffs Corp (COFCO), the largest State-owned agricultural conglomerate, has made steady progress in its overseas investment, said Chairman of the Board Frank Ning.
COFCO plans to build up its global logistics and processing systems next year, handling products such as corn, soybeans, rapeseed oil, sugar and wheat, Ning said.
"Some deals are now being negotiated. We will invest wherever it is necessary," Ning said, suggesting the total amount could be huge. "We have laid the groundwork for expansion," he said, without giving further details.
In November, COFCO announced plans to invest overseas through mergers and acquisitions over the next five years. The company will focus on a number of foreign markets including the United States, Australia and Southeast Asia, said Jiang Hua, a board member.
Ma Wenfeng, a senior analyst at Beijing Orient Agribusiness Consultant Ltd, a major agricultural consultancy, said now was a good time for foreign acquisitions.
As developed countries are struggling with a sluggish economic recovery, Chinese companies could make acquisitions more cheaply, Ma said.
"Overseas expansion will make COFCO more competitive in the global food industry," he added.
With COFCO's overseas network, China's processing companies could import agricultural products at lower prices, Ma added.
"This will give Chinese companies more leeway in the international food market," he said.
According to the Ministry of Agriculture, China's agricultural trade surged to $122 billion in 2010 from $28 billion in 2001. Imports jumped to $72.6 billion in 2010 from $12 billion 10 years earlier, an annual rise of 22.3 percent.
A trade deficit in agricultural products also emerged and widened rapidly during these years. In 2010, China's trade deficit in the sector increased to $23 billion from $4.6 billion in 2004.
"With overseas investment, we could make use of resources in the international food market," Ning said.
Domestically, COFCO has expanded to cover agricultural production, processing and retailing. The company has so far cooperated with more than 1.55 million farming households.
The farmers grow crops on 233,000 hectares of farmland for COFCO's processing businesses.
"The farmers trust COFCO because we are a State-owned company. This is our advantage in competition," Ning said.
"We intend to foster a whole business chain from farms to consumers' tables, and we will continue striving to create value for farmers," he added.
Wednesday, December 28, 2011
Juice Maker eyes North American Orchards
Company plans to use mergers and acquisitions to expand overseas
BEIJING - Shaanxi Haisheng Fresh Fruit Co Ltd, the largest producer of apple-juice concentrate in the world, is planning to buy fruit orchards in the United States and Canada to expand its presence overseas, said a company official.
"It (the purchasing plan) is part of our strategic business transformation," said Li Rong, director of capital operations of the company. "We are looking for possible opportunities to use mergers and acquisitions to own fruit plantations in North America. And we aren't excluding opportunities to work on deals involving fruit-juice processing and distribution overseas if they are good enough," she said, declining to elaborate.
Nearly 15 years after Haisheng was established, the company was capable in 2010 of churning out 405,000 tons of apple-juice concentrate. That feat came following a series of investments in expansion at home and abroad, making the company the largest processor and provider of the concentrate.
In 2010, Haisheng's annual exports accounted for 25 percent of the nation's total exports and 25 percent of world trade in apple-juice concentrate.
Among its current clients are some of the best known companies in China and abroad: China Huiyuan Juice Group Ltd, the largest juice maker in China, Pepsico Inc and Coca-Cola Co, the largest beverage producers in the world.
In 2005, Haisheng was listed on the Hong Kong Stock Exchange.
"While we have gained a firm foothold in the global market, we are preparing for a strategic business transformation," she said. "The first step will be to develop the industrial upper chain through merger and acquisition deals overseas.
"We are discussing buying fruit orchards in the US and Canada."
Haisheng already has a strong presence in the US. The company set up a sales office there in 1998 and has become the largest provider of apple-juice concentrate in the American market, supplying 30 percent of the country's demand for juice.
"Now is a good time for us to develop our upstream business in North America, where the land is fertile and comparatively cheap," Li said.
Haisheng has a strong presence in other countries as well. It supplies 9 percent of the Europe Union's demand for juice, 46 percent of South Africa's and 29 percent of Russia's.
"We will also see if there are opportunities to expand overseas in the processing and distribution of fruit juice," she said.
The company has been trying to expand through acquisitions.
In 2010, Haisheng acquired Yitian Group, the China-based juice business of Japan's Itochu Corp, for $10.38 million
Under the agreement, Itochu will help Haisheng sell and distribute fruit juice products in Japan. The acquisition is expected to help Haisheng's production capacity increase by 15 percent, and the Chinese provider's market share in Japan is expected to increase to 40 percent from 8 percent.
Despite those successful acquisitions, Chinese companies still face difficulties in acquiring land overseas.
The government of Iceland recently rejected a proposal from the Chinese billionaire investor Huang Nubo, who wanted to buy 300 square kilometers of land on the northern part of the island for $200 million.
Explaining its rejection, the government said such a transfer of property would be "incompatible" with the country's laws.
China Daily
BEIJING - Shaanxi Haisheng Fresh Fruit Co Ltd, the largest producer of apple-juice concentrate in the world, is planning to buy fruit orchards in the United States and Canada to expand its presence overseas, said a company official.
"It (the purchasing plan) is part of our strategic business transformation," said Li Rong, director of capital operations of the company. "We are looking for possible opportunities to use mergers and acquisitions to own fruit plantations in North America. And we aren't excluding opportunities to work on deals involving fruit-juice processing and distribution overseas if they are good enough," she said, declining to elaborate.
Nearly 15 years after Haisheng was established, the company was capable in 2010 of churning out 405,000 tons of apple-juice concentrate. That feat came following a series of investments in expansion at home and abroad, making the company the largest processor and provider of the concentrate.
In 2010, Haisheng's annual exports accounted for 25 percent of the nation's total exports and 25 percent of world trade in apple-juice concentrate.
Among its current clients are some of the best known companies in China and abroad: China Huiyuan Juice Group Ltd, the largest juice maker in China, Pepsico Inc and Coca-Cola Co, the largest beverage producers in the world.
In 2005, Haisheng was listed on the Hong Kong Stock Exchange.
"We are discussing buying fruit orchards in the US and Canada."
Haisheng already has a strong presence in the US. The company set up a sales office there in 1998 and has become the largest provider of apple-juice concentrate in the American market, supplying 30 percent of the country's demand for juice.
"Now is a good time for us to develop our upstream business in North America, where the land is fertile and comparatively cheap," Li said.
Haisheng has a strong presence in other countries as well. It supplies 9 percent of the Europe Union's demand for juice, 46 percent of South Africa's and 29 percent of Russia's.
"We will also see if there are opportunities to expand overseas in the processing and distribution of fruit juice," she said.
The company has been trying to expand through acquisitions.
In 2010, Haisheng acquired Yitian Group, the China-based juice business of Japan's Itochu Corp, for $10.38 million
Under the agreement, Itochu will help Haisheng sell and distribute fruit juice products in Japan. The acquisition is expected to help Haisheng's production capacity increase by 15 percent, and the Chinese provider's market share in Japan is expected to increase to 40 percent from 8 percent.
Despite those successful acquisitions, Chinese companies still face difficulties in acquiring land overseas.
The government of Iceland recently rejected a proposal from the Chinese billionaire investor Huang Nubo, who wanted to buy 300 square kilometers of land on the northern part of the island for $200 million.
Explaining its rejection, the government said such a transfer of property would be "incompatible" with the country's laws.
China Daily
(China Daily 12/20/2011 page16
Tuesday, December 6, 2011
Unity is the key for China's top private firms
A new chamber of commerce has been established to help companies challenge in foreign markets
BEIJING - Some of China's largest private companies have decided to unite to develop overseas markets, as an increasing number of them aspire to develop into global players.
The China International Chamber of Commerce for the Private Sector (CICCPS) was established in Beijing on Thursday. It has more than 100 members, including some of the country's biggest private companies, such as Geely Automobile Holdings Ltd, the auto giant that bought Sweden's Volvo AB last year, and New Hope Group Ltd, China's largest producer of animal feed.
The aim of the CICCPS is that private companies will help each other in overseas investment, including the provision of coordination between domestic and foreign government agencies, and in setting up platforms to obtain financing.
"Internationalization has become the strategy for many Chinese companies," said Zheng Yuewen, chairman of the organization. "They need to develop on a global scale and be internationally competitive."
The country's 7.5 million private-owned companies have become a major force in overseas investment. In the next three years, one-third of them will set up sales networks overseas and a quarter of them will establish offices in other countries, according to Guo Guangchang, chairman of Fosun International Ltd, one of China's largest conglomerates.
The private enterprises might also be able to benefit from China's vast foreign-exchange reserves when making overseas investments, according to some members. So far, the foreign-exchange reserves - totaling more than $3 trillion - have mainly been used to aid the overseas expansion of State-owned companies.
"The investment of our foreign-exchange reserves should be more diversified, and private business is an important channel," said Wu Xiaoqiu, director of the Financial and Securities Institute of Renmin University of China.
"Private companies have more advantages in their decision-making systems, and they are also better at executing plans compared with State-owned enterprises," said Wang Jianxi, executive vice-president and chief risk officer of China Investment Corp, the country's sovereign wealth fund.
The overseas development of Chinese private enterprise has already attracted foreign investors. In July, the British financier Jacob Rothschild said that his RIT Capital Partners will set up a private-equity fund of $750 million with members of the CICCPS to aid the development of Chinese companies overseas.
Many of the country's private enterprises compete with each other at the low-end while doing business overseas, said Yin Mingshan, chairman of Lifan Industry (Group) Co Ltd, a leading motorcycle manufacturer. "They compete by offering the lowest price possible, and hurt each other as a result. Joining the chamber will make them more self-disciplined," he said.
China Daily
(China Daily 11/25/2011 page15)
BEIJING - Some of China's largest private companies have decided to unite to develop overseas markets, as an increasing number of them aspire to develop into global players.
The China International Chamber of Commerce for the Private Sector (CICCPS) was established in Beijing on Thursday. It has more than 100 members, including some of the country's biggest private companies, such as Geely Automobile Holdings Ltd, the auto giant that bought Sweden's Volvo AB last year, and New Hope Group Ltd, China's largest producer of animal feed.
The aim of the CICCPS is that private companies will help each other in overseas investment, including the provision of coordination between domestic and foreign government agencies, and in setting up platforms to obtain financing.
"Internationalization has become the strategy for many Chinese companies," said Zheng Yuewen, chairman of the organization. "They need to develop on a global scale and be internationally competitive."
The country's 7.5 million private-owned companies have become a major force in overseas investment. In the next three years, one-third of them will set up sales networks overseas and a quarter of them will establish offices in other countries, according to Guo Guangchang, chairman of Fosun International Ltd, one of China's largest conglomerates.
The private enterprises might also be able to benefit from China's vast foreign-exchange reserves when making overseas investments, according to some members. So far, the foreign-exchange reserves - totaling more than $3 trillion - have mainly been used to aid the overseas expansion of State-owned companies.
"The investment of our foreign-exchange reserves should be more diversified, and private business is an important channel," said Wu Xiaoqiu, director of the Financial and Securities Institute of Renmin University of China.
"Private companies have more advantages in their decision-making systems, and they are also better at executing plans compared with State-owned enterprises," said Wang Jianxi, executive vice-president and chief risk officer of China Investment Corp, the country's sovereign wealth fund.
The overseas development of Chinese private enterprise has already attracted foreign investors. In July, the British financier Jacob Rothschild said that his RIT Capital Partners will set up a private-equity fund of $750 million with members of the CICCPS to aid the development of Chinese companies overseas.
Many of the country's private enterprises compete with each other at the low-end while doing business overseas, said Yin Mingshan, chairman of Lifan Industry (Group) Co Ltd, a leading motorcycle manufacturer. "They compete by offering the lowest price possible, and hurt each other as a result. Joining the chamber will make them more self-disciplined," he said.
China Daily
(China Daily 11/25/2011 page15)
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