360114cov 11/21/05 6:20 PM Page 1
2005-5 canada in
chinaGOING GLOBAL
The Why, When, Where and How of Chinese Companies’ Outward Investment Intentions Kenny Zhang, Research Analyst, Asia Pacific Foundation of Canada 360114cov 11/21/05 6:20 PM Page 2
ISSN 1706-919X – print ISSN 1706-9203 – online © Copyright 2005 by Asia Pacific Foundation of Canada. All rights reserved. Canada in Asia may be excerpted or reproduced only with the written permission of the Asia Pacific Foundation of Canada.
November, 2005 CONTENTS
ACRONYMS 2 Satisfaction with Current ODI Performance 18 3.3 FUTURE ODI INTENTIONS OF EXECUTIVE SUMMARY 3 CHINESE COMPANIES 19 Short Term vs. Medium Term 19 1 INTRODUCTION 5 The Development of Government Does Company Size Matter? 19 Policy on Overseas Investment 6 Are SOEs More Likely To Invest? 19 Five Improved Policy Areas to Form of Future ODI 21 Facilitate Overseas Investment 7 Fields of Future ODI Activities 21 Industry Sectors of Future ODI 22 2 CHINA’S OUTWARD DIRECT Location of Future ODI 22 INVESTMENT PERFORMANCE 11 Motivation for Future ODI 22 ODI Flows and Stocks 11 3.4 IS CANADA A DESTINATION Major Players 11 FOR CHINESE ODI? 24 Regional Distribution 11 Perception of Canada 24 Sectoral Distribution 12 Chinese View of Attractive Investment Driving Forces 13 Sectors in Canada 24 Future Trends 13 Key Considerations on Investing in Canada 24 Larger Companies More Positive on 3 RESULTS OF APF CANADA/CCPIT SURVEY 14 Investing in Canada 24 3.1 DESCRIPTION OF SAMPLE 14 SOEs are More Likely to Invest in Canada 25 Geographic Representation 14 Breakdown by Company Size 14 4 CONCLUSION 26 Breakdown by Ownership Structure 14 Breakdown by Industry Sector 14 ANNEXES 3.2 CURRENT ODI BY CHINESE COMPANIES 16 A. APF Canada/CCPIT Survey Website 29 Involvement in Overseas Business Operations 16 B. Questionnaire on Investment Intentions Timing of Current Outward Direct Investment 16 of CCPIT Members 30 Current ODI by Region 16 C. Outline of Major Chinese Overseas ODI by Form of Business 17 Corporate Investors 35 Fields of Business Activity 17 D. Summary of China’s Investments in Canada 39 Type of ODI 17 E. Notes 42 Ownership Structure of ODI 17 F. References 44 Driving Forces of Current ODI 18
– 1 – ACRONYMS
APF Canada Asia Pacific Foundation of Canada
CAITEC The China Academy of International Trade and Economic Cooperation (of the Ministry of Commerce)
CCPIT The China Council for The Promotion of International Trade
EID/CCPIT Economic Information Department, The China Council for The Promotion of International Trade
FDI Foreign Direct Investment
MOFCOM Ministry of Commerce of China
MOFTEC Ministry of Foreign Trade and Economic Cooperation (now renamed MOFCOM)
NBS National Bureau of Statistics of China
NDRC National Development and Reform Commission of China
ODI Outward Direct Investment
SAFE State Administration of Foreign Exchange of China
SOE State-owned Enterprise
UNCTAD United Nations Conference on Trade and Development
– 2 – EXECUTIVE SUMMARY
This report presents the results of a survey The main findings of the survey include: conducted jointly by the Asia Pacific Foundation of Only 14% of respondent companies have had Canada (APF Canada) and The China Council for the overseas investments, and more than half of the Promotion of International Trade (CCPIT) in May- ODI has gone to Asia. Setting up representative June 2005. The objective of this survey is to gain a and sales offices is the most common vehicle for better understanding of outward direct investments undertaking ODI. (ODI) by Chinese companies under the government’s Go Global strategy. More specifically, Over 60% of existing ODI was undertaken through it aims to understand who intends to invest, where joint ventures, rather than as greenfield investment and why. or merges and acquisitions. Some 90% of Chinese ODI projects are wholly owned or predominantly The report also examines the development of China’s owned by Chinese investors (holding a 50.1% or more ODI since the liberalization of the economy began in stake). Nine-tenths of respondents are satisfied with 1978. It outlines the five stages in the evolution of their current ODI projects. government regulation of offshore investment leading up to the adoption of the Go Global policy now being 23% of respondents have the intention to increase, implimented. either substantially or moderately, their ODI within the next 12 months. This intention increases to over China’s overseas non-financial investment reached a 40% with a 2-5-year timeframe. record US$5.5 billion in 2004, up by 93% compared with the same period of 2003. By the end of 2004, Larger companies are more likely to undertake or cumulative overseas investment by China was close increase ODI relative to their smaller counterparts. to US$44.8 billion. Chinese investment into Canada in 2004 was just US$5.1 million. By the end of 2004, A majority (56%) of respondents do not have a clear some 5,163 Chinese enterprises had invested directly perception of the methods they will use to undertake in 149 countries or regions, covering 71% of the future ODI in the global market. countries or regions in the world Trading, manufacturing, and resource extraction, The APF Canada-CCPIT survey targets CCPIT’s member handling or processing are the top three business companies1 as the sample base to gain an insight into activities of Chinese companies that have the future investment intentions by Chinese entetrprises. An strongest intention to invest overseas in the future. access-controlled, web-based questionnaire2 was opened for response during the period 25 May-15 June, 2005. The top three industrial sectors of Chinese All companies that responded to the survey completed companies that are considering ODI expansion the questionnaire either directly or with assistance of the within 2-5 years are the automotive, food & EID/CCPIT. beverages and mechanical & electrical sectors.
During the survey period, 311 responses were received Asia is the top target of respondents considering on the website. Eliminating some duplicated and future ODI expansion, followed by Europe and incomplete records left a total of 296 valid responses North America. Canada accounts for only 12-14% that were used for analysis in this report. of possible ODI expansion in the future.
– 3 – The top three driving forces of existing Chinese ODI are: the business potential or expansion into global markets; the Chinese government’s Go Global policy and its related incentives; and the transparent and fair regulatory environment in investment destinations.
The most important determinants of future Chinese ODI are: business potential or expansion prospects; security of investment; and a favourable tax system in the target market.
Only 4% of respondent Chinese companies currently have investment projects in Canada; about 6% of respondents had considered investing in Canada, but eventually decided not to go ahead.
8.4% of total respondents are considering investing in Canada. About 14% of larger companies are considering investment in Canada, while only 7% of smaller ones are doing so.
Publicly owned companies are more likely to start or increase their ODI in general, but SOEs are more interested in investment opportunities in Canada.
More than 40% of respondents do not have a basic knowledge of sectoral investment opportunities in Canada.
Respondent companies regard ICT, energy and biotech as the most promising sectors for investment in Canada.
Respondents consider the following factors as the most important attractions for investment in Canada: 1. The quality of life in Canada is among the highest in the world; 2. Canada can access US and other key markets; and 3. Canada has abundant and reliable energy resources.
– 4 – INTRODUCTION
1
China, it is widely acknowledged, is emerging as a global important source of foreign investment in the world. economic powerhouse. Much attention has been focused Some of this will certainly flow to Canada. on its economic growth which has been maintained at a remarkable average rate of over 9% annually for the past The prospect of China becoming a major source of two decades; its attraction to foreign direct investment foreign direct investment is greeted with a mixture of (FDI), which has seen it overtake the US as the world’s enthusiasm and concern around the world. Although top recipient of FDI; its trade expansion, which has FDI is now widely accepted as a net gain for receiving caused it to run huge surpluses with some of its major economies, some are still wary of being taken over by trading partners; and the rapid maturity of its market Chinese companies especially those backed by the state. which has seen the emergence of a large and relatively One particular fear is that China’s state-owned enterprises, affluent middle class. However, one aspect of China’s with a reputation for poor management transparency, rising economic power that is often overlooked — or is low productivity and lack of concern for worker rights, sometimes noticed with alarm — is the growth of China’s might “infect” companies that they invest in overseas. outward direct investment. China’s global hunt for energy resources has also raised concerns of national economic security in some of the Since the opening of its doors to the world in 1978, countries being targeted. China’s outward investment has grown dramatically, moving through several distinct stages. From almost These concerns are not groundless. But to a large extent, zero to a record US$5.5 billion invested offshore in the fears could be attributed to limited awareness of 2004, China is among the source countries with the Chinese ODI, because it is a new phenomenon and there fastest growing outward direct investment in the world. is a lack of research in this area. This report, and the study on which it is based, are an attempt to develop Because of its relatively late start, Chinese outward a greater understanding of how and why China’s FDI investment is currently still quite small by world standards. policies and practices have developed. Last year the US$5.5 billion invested offshore was an increase of 93% over the 2003 outflow. Still, at the end of Evolution of China’s Overseas Investment 2004, China’s accumulated ODI stock was only US$44.8 Policy and Administration billion, just 12% of the amount Canadian companies had Since the late 1970s, China’s overseas investment policy invested offshore. At these levels China’s annual outflow has gone though strategic shifts, moving from political- and stock of investment represent only 0.9% and 0.55% of objective centred to the commercial-interest oriented; the respective global totals. from central government-dominated to local government- led and then to enterprise-led; and from resource-seeking Yet under the government’s Go Global policy, Chinese to the trinity of resource-, market- and technology-seeking. firms are enthusiastic about investing overseas. As a The Chinese government has issued corresponding joint survey undertaken by the Asia Pacific Foundation policies and regulations at various stages of this process. of Canada and the China Council for the Promotion of International Trade shows, 23% of respondents intend The Go Global policy was initiated by former Premier Zhu to increase their overseas investment within the next 12 Rongji in his annual Policy Address in 2000, officially months and that more than 40% intend to invest encouraging Chinese firms to invest abroad with overseas within 2-5 years. Thus, both the magnitude government approval. With China’s entry into the WTO and share of Chinese ODI are set to rise in the years at the end of 2001, China began gradually to fine-tune its ahead, and China has the potential to become an Go Global policy. In 2002, the strategy of encouraging
– 5 – Chinese enterprises to invest overseas was inscribed in to apply for permission to establish subsidiaries in the report of the Chinese Communist Party’s Sixteenth other countries. Standardized regulations were drawn Congress, which marked a turning point for China’s up to cover the approval procedures. In May 1984, policy on overseas investment. Today, China is moving MOFTEC enacted the Notice about Principles and the into the merger-and-acquisition major league, as its Scope of Authority for Examination and Approval of star corporations shop for North American household Establishing Non-trading Enterprises in Foreign names like Unocal, Maytag, Noranda and IBM, looking for Countries, Hong Kong and Macao. In July 1985, the bigger profits through global expansion. ministry also implemented the Interim Regulations on the Administrative Measures and Procedures of Go Global has become a key strategy of the country’s Examination and Approval of Establishing Non-trading economic development. How has this strategy evolved Enterprises Abroad. over the years? What procedures must a Chinese enterprise go through to be able to invest abroad? What STAGE THREE (1993 – 1998) measures have the government taken to support these Tightening of Management of Overseas Investment enterprises? This report notes that the government has A stricter and more rigorous screening and monitoring issued more than a dozen directives governing overseas process was applied due to a surge of state asset losses investment in the past three years, demonstrating that a in Hong Kong real estate and stock market speculation. new overseas investment regime has been established, Measures were taken to regularize investment outflows which will further intensify China’s emerging outbound so as to ensure that Chinese capital was properly investing. The first section of the summary examines the invested overseas for genuinely productive purposes. five stages in the development of government policy on Agencies such as the State Planning Commission and overseas investment. The second section shows that State Administration of Foreign Exchange Control had the government has made progress to facilitate overseas to examine proposals that involved overseas investment investment in five areas; in particular it sets out the of more than US$1 million, before referring them to procedures that a Chinese enterprise should undertake in MOFTEC for final approval. MOFTEC drafted the order to “go global.” Regulations on the Administration of Overseas Enterprises in 1993, and implemented Measures for the Administration THE DEVELOPMENT OF GOVERNMENT POLICY of Overseas Trading Companies and their Representative ON OVERSEAS INVESTMENT Offices in 1997. Generally speaking, the development of government policy on overseas investment can be classified into STAGE FOUR (1999 – 2002) five stages:1 Encouraging Overseas Projects in Processing Trade 2 This was a starting point for Chinese enterprises to STAGE ONE (1979 – 1983) go global. In 1999, Some Suggestions on Encouraging Case-by-Case Approval Enterprises to Develop Overseas Business in Processing Only state-owned trading corporations, as well as and Assembling the Supplied Materials was issued to provincial and municipal-based international economic encourage enterprises to engage in processing and technological cooperation enterprises, were trade overseas. Enterprises producing light allowed to invest overseas. The State Council was the industrial goods like textiles, machinery and only authority to examine and approve overseas electrical equipment were specifically encouraged to investment, no matter what the size of the investment. establish overseas manufacturing projects that could There were no regulations regarding ODI. process Chinese raw materials or assemble Chinese- made parts that could eventually spur China’s STAGE TWO (1984 – 1992) exports. The State Council started to grant export tax From Case-by-Case to Standardization of rebates, foreign exchange assistance and financial Approval Procedures support to overseas Chinese companies that used The government liberalized restrictive policies and Chinese raw materials or Chinese-made parts and allowed more enterprises, including non-state firms, machinery.
– 6 – STAGE FIVE (2002 – Present) NDRC and MOFCOM. The role of the NDRC is to Full Implementation of Go Global Strategy examine whether the overseas investment project is in In 2002, at the Chinese Communist Party’s Sixteenth line with China’s economic security, industrial policy Congress, the new leadership advocated the strategy and capital management, whereas MOFCOM is to of Go Global to improve the overall level of opening- examine the enterprise’s overseas business contract, up of the economy. The government currently is terms and conditions, etc. The approval procedures striving to streamline the procedures for approving for firms intending to invest overseas are rather overseas investments, provide more efficient services complicated, since most enterprises have to deal with and ease restrictions. Many policies and guidelines both these major departments. have been made and measures have been taken to achieve these goals. The old management system of Recently, the government realized that eradicating overseas investment, which was centred on approval red tape and streamlining approval procedures are procedures, no longer fits the Go Global strategy. On July more helpful to companies planning to invest 16, 2004, the State Council issued a landmark document, overseas than just offering them financial incentives. the Decision on Reforming the Investment System, indicating Therefore, two important documents governing that the role the government plays in enterprises’ overseas approval procedures were enacted in October 2004: investment has gradually shifted from approval to the NRDC issued Interim Measures for the supervising and providing services. Administration of Examination and Approval of the Overseas Investment Projects, and MOFCOM issued FIVE IMPROVED POLICY AREAS TO FACILITATE Provisions on the Examinatin and Approval of OVERSEAS INVESTMENT Investment to Run Enterprises Abroad. There are three The government has made more effort in the following major positive changes in China’s overseas five areas: creating incentive policy; streamlining investment management embodied in these administrative procedures; easing capital controls; circulars: providing information and guidance; and reducing Approval authority decentralized to local levels: investment risks. previously, overseas projects involving investment of more than US$1 million had to seek the approval of 1. Creating incentive policy the NDRC. With the new measures, this investment On October 27, 2004, the National Development and approval ceiling has been raised to US$30 million Reform Commission (NDRC) and the Export-Import for resource exploration projects. The authority to Bank of China established a mechanism for providing examine other investment projects has been handed preferential interest rates for some key overseas over to local authorities and some left to the projects.3 The four types of projects that can receive enterprises themselves. interest-subsidized loans are: Simplified procedures: previously, the NDRC Overseas development projects that can cover the required project proposal and feasibility reports for shortage of domestic resources; examining and approving a project, but now only Overseas manufacturing and infrastructure an application is subject to examination. The focus projects that can spur the export of domestic has been shifted to the legitimacy of the investors technology, products, equipment and labour; themselves and the sectors they invest in. The Overseas R&D projects that will tap into advanced rationale is that investors, instead of the government, global technology, managerial skills and talents; and should be more responsible for their business Overseas acquisition and merger projects that will plans and profit prospects. enhance enterprises’ international competitive Enhanced transparency: in order to facilitate capacity and help them develop international markets. overseas investments and improve transparency of the applications, MOFCOM promotes 2. Streamlining Administrative Procedures “Internet Administration,” encouraging The two key government departments involved in enterprises to apply for overseas investment examining and approving overseas investment are the through the Internet, the result of which
– 7 – MOFCOM will announce via the Internet. Most 3. Easing Capital Controls of the policies, regulations and other relevant Traditionally, outbound investment by Chinese companies documents have been put on websites, so that was highly regulated, with the State Administration for they can be more accessible to the general public. Foreign Exchange (SAFE) responsible for capital controls. The primary concern was to conserve foreign currency and How can a Chinese enterprise make an overseas prevent leakage of state assets. The government’s aim has investment? Figure 1 shows the approval procedures been to tie overseas investment in targeted sectors and for overseas investment projects after October 2004.4 industries to China’s long-term strategies.
FIGURE 1: APPROVAL PROCEDURES FOR CHINA’S OVERSEAS INVESTMENT PROJECTS5
ODI PROJECTS
Over US$200 million Offshore resource Central SOEs with Other projects or involving foreign exploration projects offshore investment exchange over over US$30 million, less than US$30 US$50 million or projects involving million (resource foreign exchange exploration over US$10 million projects), or projects involving foreign exchange less than US$10 million.
Examined by NDRC Submit to NDRC for Register at NDRC, Examined by local and reported to the examination and which should departments of State Council. approval. NDRC subsequently issue a NRDC, which should should process the certificate of make a decision in 20 application within registration within days and report their 20 days. seven days. decisions to NRDC.
(For bidding or acquisition projects, Final decision will written documents Submit application With the approval be made by the should be to MOFCOM, which by NRDC, the State Council. submitted to NDRC should make the enterprises should prior to bidding or final decision within submit their acquisition. NDRC 15 days. application to local should process departments of these documents commerce, which within sevven days. should make the Projects successful final decision within in bidding or 15 days. acquisition should also undergo this MOFCOM or local approval procedure departments of by NRDC.) commerce should seek advice from the Economic and Commercial section of Chinese embassies or consulates.
With the certificate of approval of the above-mentioned authorities, the enterprises can then proceed to matters in relation to foreign exchange, bank loans, customs and excise and relevant foreign affairs.
– 8 – China has become a capital-surplus economy and its (No.1), enterprises that are granted approval certificates overseas investment has grown apace. Therefore, for investments are entitled to beneficial treatment in SAFE has striven to reform its foreign exchange connection with capital, foreign exchange, taxation, management over the years. Its first tentative customs, exit-entry, etc. liberalization came in 1999 affecting only projects entailing foreign processing or assembly operations, Moreover, MOFCOM is also establishing an “in kind” (non cash) investments by Chinese investors, information bank for Chinese enterprises with or foreign aid. Chinese investors in these projects overseas investment intentions.8 These enterprises were allowed to substitute a letter of undertaking for the can download and fill out the “Registration Form security deposit that was generally required from for Overseas Investment Intentions of Enterprises” Chinese outward investors. from the government website,9 and submit it. In this way, the government can provide timely In late 2002, as is typical when China is planning a information for these enterprises on such topics as change in policy, experimental new regulations were investment demands in other countries, opportunities issued by SAFE, liberalizing outbound investments for participation in business fairs, policies and from 14 “pilot” localities.6 Since 2002, the old SAFE regulations in host countries, and professional policy of requiring overseas profits to be remitted to training, etc. Meanwhile, this venue will help overseas China immediately has been terminated in these “pilot” institutions and enterprises better understand the localities. Instead, Chinese investors are allowed to use needs of these Chinese companies and communicate the profits to make further investments abroad. with them.
Moreover, local branches of SAFE were granted more 5. Reducing Investment Risks authority. Previously, local branches of SAFE in these In November 2004, MOFCOM announced the pilot areas were allowed to handle any deal valued establishment of Systems of Reporting Country below US$3 million. (SAFE normally checks the Investment and Operation Obstacles. This reporting legitimacy of the source of the Chinese company’s mechanism strives to lower the investment risks foreign exchange.) In May 2005, in order to further faced by Chinese enterprises. According to this loosen its strict capital controls, SAFE granted its local circular, economic and commercial sections of bureaus authority to manage any deal valued below Chinese embassies/consulates, and overseas Chinese US$10 million. enterprises should write annual reports, or report periodically on the problems, obstacles or barriers faced In May 2005, these “pilot” areas were expanded to the by overseas Chinese companies in their investment whole country, and foreign exchange bureaus were destinations. The ministry should then compile reports given a US$5-billion quota in 2005, up from US$3.3 about investment bottlenecks and publish them regularly billion in 2004. The reforms granted domestic and to warn potential investors. Furthermore, should any multinational companies in China greater freedom by problem occur in the host countries, MOFCOM could allowing them to buy more foreign currency as well as react promptly to protect the legitimate rights of the to lend the money to overseas subsidiaries. Chinese enterprises through bilateral mechanisms.
4. Providing Information and Guidance Learning from experience in other countries, the In July 2004, MOFCOM released the first industry-based NDRC and China Export and Credit Insurance guidelines, Guidelines for Investments in Overseas Countries’ Corporation set up a risk prevention mechanism for Industries (No.1), which cover 67 nations, including key overseas investment projects in 2005. China Canada,7 and a variety of industries highlighting the Export and Credit Insurance Corporation will provide agriculture, mining, manufacturing and service sectors. services such as risks assessment, risk control, and The Guidelines (No.1) form the basis for the governing investment insurance for four types of key overseas authorities to approve and supervise investment projects according to the policy of the NDRC.10 An overseas, and are designed to facilitate procedures in example is that TCL, the Chinese electronic appliance relation to investments abroad. According to Guidelines giant with more than half of its business abroad, has
– 9 – recently reached an agreement with China Export and Credit Insurance Corporation to reduce its investment risks. The insurance volume will reach US$1.5 billion in 2006, and the insurance corporation will establish a “global risk management system for overseas business” for the company.
Since 2003, MOFCOM has issued five documents with other government authorities to supervise and reduce the risks of overseas investment. Besides Systems of Reporting Country Investment and Operation Obstacles, other directives are: Statistical System of Direct Overseas Investment 11 reveals the basic status of Chinese investors, their overseas enterprises and their major economic activities overseas. Measures for Overseas Investment Comprehensive Performance Evaluation and Joint Annual Inspection12 examines cost-efficiency, developmental capacity, asset quality, social contribution, and the ability of overseas investments to pay off debts. The Internet Registration System of Exploring Overseas Mineral Resources.13 The Prophase Reporting System for the Overseas Merger and Acquisition Related Matters of Enterprises.14
As shown, the government has sought to reform its administration system of overseas investment since the Go Global strategy was implemented. Recently, a new overseas investment regime has been established, focusing on streamlining the approval procedures and providing more services in order to encourage and facilitate China’s outbound investment.
At the same time, the State Assets Supervision Administration has increased the control of Chinese companies moving overseas by setting up an effective management and supervision system. After the scandal of China Aviation Oil (Singapore) Corporation, which engaged in insider trading leading to US$550 million in losses, the central government realized the importance of monitoring corporate governance to prevent state assets losses. In the future, more guidelines and policy reforms are expected for even better supervision of overseas investment.
– 10 – CHINA’S OUTWARD DIRECT INVESTMENT PERFORMANCE 2
ODI Flows and Stocks 2004. State-owned enterprises have slipped from a According to the latest statistics1 of China’s Ministry dominating position to be just some among the major of Commerce and National Bureau of Statistics players, as shown by the share of ODI held by SOEs (MOFCOM and NBS, 2005), China’s overseas non- dropping from 43% in 2003 to 35% in 2004. Publicly financial investment reached a record US$5.5 billion in owned companies, including limited liability companies, 2004, up by 93% compared with the same period of shareholding companies and collective companies, the previous year. By the end of 2004, cumulative accounted for 45% of total investors, up from 39% in overseas investment by China was close to US$44.8 2003. Private companies accounted for 12%, gaining two- billion. China’s ODI climbed from zero to the current percentage points from a year earlier. A summary of major level in just 25 years. The overall performance of China’s Chinese ODI players is attached in Annex C.2 ODI is shown in Figures 2 and 3 (see page 12). Regional Distribution Major Players In 2004, more than half (54.6%) of new Chinese By the end of 2004, some 5,163 Chinese enterprises had overseas investments went to Asia, in particular, invested directly in 149 countries or regions, covering Hong Kong. The total investment flow to Asia reached 71% of the countries or regions in the world. US$3.0 billion. Hong Kong accounted for US$2.6 billion, followed by Indonesia (US$62 million) and The Chinese ODI players became more diversified in Singapore (US$48 million). Some US$1.76 billion was
FIGURE 2: CHINA’S ANNUAL FDI OUTFLOWS, 1979-2004 ○○○○○○○○○○○ Stage 1○○○○○○○○○○○ Stage 2○○○○○○○○○○○ Stage 3○○○○○○○○○○○ Stage 4 Stage 5 8,000
7,000
6,000
5,000 ○○○○○○○○○○○○○○ ○○○○○○○○○○○○○○ ○○○○○○○○○○○○○○ ○○○○○○○○○○○○○○
4,000 US$ Millions 3,000
2,000
1,000
0
1979 1984 1989 19941999 2004
Source: 1979-1993: Wong and Chan (2003); 1994-2002: UNCTAD (Varioius years; 2003-2004 MOFCOM & NBS, 2004; 2005.
– 11 – invested in Latin America, mostly in the tax havens of the FIGURE 3: CHINA’S OUTWARD FDI STOCK Cayman Islands and the Virgin Islands, representing 32% of the annual total.
China’s investment in Africa recorded a breakthrough 50 in 2004. Total investment more than doubled to 44.8 US$317 million, accounting for 5.8% of the total, 45 mostly in Sudan (US$147 million) and Nigeria (US$46 40 million). The amount invested in Europe remained at
US$170 million, mostly in Russia (US$77 million), UK 35 (US$29 million) and Germany (US$28 million), representing a 3.1% share. 30
North America had US$126 million, or 2.3%, almost 25
all going to the United States (US$120 million). Billions US$ 20 Only US$ 5.1 million went to Canada. Australia 15.8 captured US$125 million, almost all of Chinese ODI 15 to Oceania, or 2.2 % of China’s total outward investment in 2004. 10
Sectoral Distribution 5 In 2004, most of these investors put their capital 0.04 0 into industries like oil and gas extraction, 1980 1985 1990 1995 2000 2001 2002 2003 2004 transportation and warehousing, wholesale and retail, and manufacturing. Specifically, 32.7% of the investors ran oil and gas businesses overseas; 15.1% were in transportation and warehousing; 14.5% in wholesale and retail trading; and 13.8% in Source: UNCTAD, World Investment Report, various years; MOFCOM manufacturing. & NBS, 2004; 2005.
TABLE 1: INWARD AND OUTWARD FDI STOCKS AS A PERCENTAGE OF GDP
1980 1985 1990 1995 2000 2002 2003
World Inward 6.6 8.3 9.3 10.2 19.3 23.0 22.9 Outward 5.8 6.6 8.6 10.0 19.1 22.6 23.0
Developed countries Inward 4.9 6.2 8.2 8.9 16.6 20.5 20.7 Outward 6.2 7.3 9.6 11.3 21.4 25.8 26.4
Developing countries Inward 12.4 16.3 14.7 16.3 29.3 31.9 31.4 Outward 3.6 3.6 3.8 5.7 12.4 12.6 12.2 China Inward 0.5 2.0 5.8 19.3 32.2 35.4 35.6 Outward — — 0.7 2.3 2.4 2.8 2.6
Source: UNCTAD, World Investment Report 2004, Annex table B.6, pp399-410.
– 12 – Driving Forces Nevertheless, China’s overseas companies have been It is too soon to have a clear sense of the motivation gaining remarkably in importance as new sources of behind China’s ODI, because the phenomenon is international capital. They are now investing, relatively recent. However, some studies have already through greenfield investment, and mergers and suggested that China’s overseas investment has been an acquisitions, worldwide and across a wide spectrum element of a broader process of restructuring and of economic activities, from trading and banking to political activity in which the Chinese government, rather manufacturing and natural resources exploitation. than simply entrepreneurship, plays an important role. With its growing economic power increasingly Government-initiated industrial investments overseas driving it to target overseas markets for investment have been motivated not only by traditional market opportunities, China is expected to become the determinants but also by the pressures of globalization world’s fifth-largest outward foreign direct investor and regionalization. More importantly, there have been this year, according to the UNCTAD 2004 forecast, political and strategic considerations behind China’s displacing Japan. decisions to invest overseas (Wang, 2002). Others have attempted to summarize Chinese companies’ motivations as being among the following (e.g., CAITEC and WDA, 2005; Wong and Chan, 2003):
To explore and open up new markets (e.g., trading companies); To avoid saturation in the home market (e.g., manufacturing companies); To avoid trade barriers (e.g., manufacturing companies); To secure access to energy, raw materials and natural resources; To acquire advanced technology and modern manufacturing know-how; To obtain internationally recognized brands; To learn advanced management methods; To take advantage of foreign preferential investment policies; To reduce production costs; To transfer excess production capacity.
Future Trends Currently, China’s ODI flows, as well as stocks, are still small in both absolute and relative terms. The annual flow of China’s ODI accounts for just 0.9% of the total international flow of FDI, and China’s accumulated ODI represents only 0.55% of the world total.
On the other hand, China’s ODI is significantly below average in terms of the ratio of outward FDI stock to GDP. Table 1 shows that China’s ODI lags not only far behind its attraction of inward FDI, but also behind the global average level, and even behind the level of an average developing country.
– 13 – RESULTS OF APF CANADA/CCPIT SURVEY
3
3.1 DESCRIPTION OF SAMPLE Therefore, the survey gives a realistic picture of Chinese Geographic Representation companies’ ODI intentions (Figure 4). Companies participating in the survey represent mainly China’s eastern coastal regions, which are the hubs of Breakdown by Ownership Structure China’s economic boom, along with one province in More than half of the respondent companies are privately- central China. These sample regions are also the major owned. Again this reflects, on the one hand, that the sources of China’s outbound investment. By the end of private sector is mushrooming in China as a result of 2004, the sample regions represented 73% of China’s economic liberalization, especially SOE reform. On the accumulated outward direct investment. A regional other, the private sector is playing a more important role distribution of respondent companies and accumulated in international trade and other international businesses ODI from these regions are shown in Table 2. thanks to China’s access to the WTO. The new Foreign Trade Law that passed in April 2004 allows individuals to Breakdown by Company Size conduct foreign trade for the first time. It is not a surprise About 60% of the companies have annual revenue of less to see an over-representation of private companies in the than Rmb10 million, and 15% are over Rmb100 million membership of CCPIT, which has the mandate to and another 25% are somewhere in between. This promote international trade and investment for Chinese composition reflects the nature of the CCPIT membership companies (Figure 5). — small-medium companies are more likely to join CCPIT for its support in entering international markets. The Breakdown by Industry Sector composition of the sample fairly reflects the structure of The respondent companies represent a wide range of Chinese industry. There were nearly 200,000 state-owned industrial sectors, from manufacturing building products and non-state-owned industrial enterprises in China in to finance and insurance. The extensive representation 2003, yielding Rmb14.3 trillion of total sales revenue (NBS, helps achieve a balanced sample of ODI intention from 2004). The average revenue was just Rmb73 million. different industries (Figure 6).
TABLE 2: REGIONS COVERED BY SURVEY AND THEIR EXISTING ODI
Province/Municipality Number of % Accumulated ODI % of Total Companies of Total by 2004 (US$M) China ODI
Hunan 108 36.5 15.45 0.4 Fujian (Xiamen) 64 21.6 165.02 3.7 Shanghai (Pudong) 55 18.6 981.55 22.3 Guangdong 31 10.5 1,539.97 34.9 Heilongjiang (Harbin) 22 7.4 79.55 1.8 Shandong (Qingdao) 7 2.4 376.38 8.5 Liaoning 5 1.7 53.87 1.2 Undefined 4 1.4
Total sample 296 100.0 3,211.79 72.9
Total China 4,408.58 100.0
Source: MOFCOM and NBS, 2004; 2005.
– 14 – FIGURE 4: GROSS BUSINESS REVENUE IN 2004 (RMB)
295 of 296 companies (99.7%)
Under 1 million ______30.2% 1-9 million ______31.5%
10-49 million ______16.3%
50-100 million ______6.4%
Over 100 million ______15.6%
FIGURE 5: OWNERSHIP STRUCTURE
283 of 296 companies (96%)
Foreign invested JV ______8.5%
Wholly-owned foreign enterprises ___ 2.1%
SOE ______14.5%
Publicly owned ______18.4%
Private ______56.5%
FIGURE 6: INDUSTRY
292 of 296 companies (99%) Building products ______20.2%
Mechanical, electrical ______13.7%
Import and export ______9.6% Textiles ______8.2%
Light Industry ______7.2%
Automotive ______6.2%
Food and beverage ______5.5%
Chemicals ______5.1%
Construction contracting ______3.1%
Other Industries ______21.2%
– 15 – 3.2 CURRENT ODI BY CHINESE COMPANIES Timing of Current Outward Direct Investment Involvement in Overseas Business Operations Outward direct investment by Chinese companies is Over two-thirds of respondent companies have some a recent phenomenon, and Chinese companies are involvement in international markets. About 15% of relatively small players in the global market. Only 14% of companies stated that more than half of their sales respondent companies have had overseas investments. revenue came from their overseas business activities, such as exports, offshore manufacturing and sales, etc. The earliest reported ODI project started in 1990, and two-thirds of the existing investment projects occurred The high involvement in international businesses again in 1999 or later when the Chinese government reflects another feature of the CCPIT membership — that consolidated the Go Global strategy (Figure 8). this group of companies is outward looking and has strong interest in the international markets, including Current ODI by Region foreign trade and overseas investment (Figure 7). Asia is the destination of the largest proportion of
FIGURE 7: % OF COMPANIES’ GROSS REVENUES FIGURE 9: ODI OPERATIONS, BY REGION FROM OVERSEAS OPERATIONS
Percentage of Respondents Active in Each Region 293 of 296 companies (99%) 78 of 296 (26%)
60% 53.8 Note: 50% This is a multiple 0% ______33.4% choice response, 1-10% ______18.1% 40% so the total exceeds 100%. 11-25% ______25.9%
26-50% ______8.5% 30% 24.4 23.1 51-75% ______8.2% 20% 76-100% ______5.8% 9.0 10% 7.7 6.4
FIGURE 8: CURRENT ODI BY CHINESE COMPANIES 0
254 of 296 companies (86%) Asia Europe North Africa Oceania Latin America America
100%
85.8 FIGURE 10: FORM OF BUSINESS OF CHINESE ODI 80%
94 of 296 companies (32%) 60%
40%
Rep. office ______28% 20% 9.4 Sales office ______28% 4.7 Agent ______19% 0% Man. facility ______13% No Investment 1990-1998 1999-2004 Sourcing/dist. centre __ 9%
Other (R&D centre) ___ 3%
– 16 – China’s existing outward direct investment, followed three business activities in which Chinese ODI investment by Europe and North America (Figure 9). has flowed to date (Figure 11).
ODI by Form of Business Type of ODI Setting up representative offices and sales offices is the Most existing Chinese outward investment projects most common practice among the Chinese companies have been accomplished through joint ventures, which currently have ODI operations, while establishing followed by mergers & acquisitions and greenfield R&D centres has also started to emerge although there investments (Figure 12). are very few cases so far (Figure 10). Ownership Structure of ODI Fields of Business Activity Almost 90% of Chinese investment projects are either Trading (including import/export), manufacturing and wholly owned or majority owned by Chinese investors resource extraction, handling or processing are the top (Figure 13).
FIGURE 11: FIELDS OF ACTIVITY
60 of 296 companies 0% 15% 30% 45% (20%)
Trading 35.0
Other manufacturing 33.3
Resource extraction, handling or processing 18.3
Other 3.3
Business services 3.3
IT products and services 3.3
Technical services 1.7
Agriculture or agri-business 1.7
Financial services 0.0
FIGURE 12: TYPE OF ODI FIGURE 13: OWNERSHIP OF CHINESE ODI
56 of 296 companies (19%) 52 of 296 companies (18%)
Wholly Chinese owned (=100%) ______27.3% Newly built Predominantly greenfield Chinese owned investment ______16.1% (51-99%) ______60.0% Merger / Partially acquisition ______23.2% Chinese owned Joint venture ____ 60.7% (<=50%) ______12.7%
– 17 – Driving Forces of Current ODI Satisfaction with Current ODI Performance The top three driving forces of existing investments Respondent Chinese companies are overwhelmingly include: business potential or expansion opportunities; the satisfied with their existing ODI operation results. government’s Go Global policy and its related incentives; and transparent and fair regulatory environment in Nine-tenths of the total respondents are either very the investment destinations. satisfied or somewhat satisfied, compared to only 5% saying they are somewhat dissatisfied or very On a scale of 1 (weakest) to 5 (strongest), the above dissatisfied. Another 5% of companies indicate that three factors receive the highest marks among all it is too soon to determine the results of ODI motivations for ODI (Figure 14). (Figure 15).
FIGURE 14: DRIVING FACTORS OF CURRENT ODI
60 of 296 companies (20%) 2 2.53 3.5 4 4.5 5
Business potential/expansion 4.47 Government Go Global policy and related incentives 4.05 Transparent and fair regulatory environment 3.93 Safety, security 3.85 Tax system 3.80 Access to advanced technology and R&D 3.74 Access to international standard management practices 3.70 Availability of investment capital 3.58 Stagnant domestic market 3.54 Overall importance of target country as a market 3.52 Government assistance 3.52 Membership in a regional free-trade arrangement 3.46 Local labour union support 3.42 Use of target country as base for exports to third country 3.40 Acquisition of established brands 3.28 Rising domestic labour cost 3.17 Access to natural resources 2.89 Access to skilled labour 2.87 Access to low cost labour 2.61
FIGURE 15: SATISFACTION WITH CURRENT ODI
100% 80.7 80%
60%
40%
20% 8.8 3.5 1.8 5.3 0%
Very Somewhat Somewhat Very Too soon satisfied satisfied dissatisfied dissatisfied to determine
57 of 296 companies (19%)
– 18 – 3.3 FUTURE ODI INTENTIONS OF intentions between different sizes of Chinese companies. CHINESE COMPANIES The expectation of increased ODI rises and the Short Term vs. Medium Term anticipation of no ODI drops as company size increases, Chinese companies are more likely to start or increase especially in the 2-5-year period. their ODI in a 2-5 year period rather than in the immediate future. About 23% of respondent companies The percentages indicating an expected increase of ODI have an intention to increase, either substantially or rise for all companies from the short-term to the medium moderately, their outward investment within the next 12 term. In a 2-5-year period, the intention to increase ODI months. This intention increases to over 40% within a rises from 30% for smaller companies to over 50% for 2-5-year timeframe. larger companies.
By contrast, the percentage of companies indicating By contrast, the percentages indicating no expected no outward investment plans declines from 50% to 27% ODI declines for all companies from the short-term in the same two-period comparison, although the to the medium-term. The biggest drop occurs in the percentage of uncertainty over outward investment largest companies. Over the 2-5-year period, the almost doubles from 11% to 20%. expectation of no ODI declines by nine percentage points for smaller companies to over 40 percentage points Less than 2% of Chinese respondent companies for larger companies. Therefore, the likelihood of no indicated a likely decrease in their outward investment ODI diminishes as the company size increases in the (Figure 16). 2-5-year period (See figures 17, 18 on page 20).
Does Company Size Matter? Are SOEs More Likely To Invest? Larger companies are more likely to start or increase The results of this survey suggest that it is not the the ODI in the near future than their smaller counterparts. SOEs, but publicly owned companies1 that act The survey results indicate a clear difference in ODI differently from other types of companies in terms of
FIGURE 16: OUTWARD INVESTMENT INTENTIONS, SHORT VS MEDIUM TERM
60%
50.2 50%
40% 34.4
30% 27.4
20.1 20% 17.6
13.5 11.4 9.7 10% 6.9 5.5 Next 12 months
1.7 1.4 Next 2 - 5 years 0 Increase Increase Stay about Decrease No Don’t know Substantially Moderately the same Investment 98% of 296 companies responded to questions in this section.
– 19 – FIGURE 17: ODI EXPECTED TO INCREASE, BY COMPANY SIZE
60%
40%
20%
0% < Rmb Rmb Rmb 10- Rmb 50- > Rmb 1 million 1-9 million 49 million 100 million 100 million In 12 months
In 2-5 years
FIGURE 18: NO ODI EXPECTED, BY COMPANY SIZE
80%
60%
40%
20%
0%
< Rmb Rmb Rmb 10- Rmb 50- > Rmb In 12 months 1 million 1-9 million 49 million 100 million 100 million In 2-5 years
FIGURE 19: ODI EXPECTED TO INCREASE, FIGURE 20: NO ODI EXPECTED, BY OWNERSHIP STRUCTURE BY OWNERSHIP STRUCTURE
SOE SOE
70% ○○○○○○ ○○○○○○
60% 60% ○○○○○○ ○○○○○○
50% 50% ○○○○○○ ○○○○○○
40% 40% ○○○○○○ ○○○○○○
30% 30% ○○○○○○ ○○○○○○
20% 20% ○○○○○○ ○○○○○○ 10% 10% ○○○○○○ Foreign Publicly Foreign Publicly funded owned funded owned
Private Private
Indicates direction of sequence of time periods. Indicates direction of sequence of time periods.
In 12 months In 12 months In 2-5 years In 2-5 years
– 20 – ODI intention in the near future. The percentages Form of Future ODI indicating an expected increase of ODI in the 12-month The majority of Chinese companies (56%) do not and 2-5-year periods illustrate a similar range for SOEs, have a clear view on the methods used to accomplish private companies, and foreign-funded companies. Only their future ODI in global markets. One-third indicate publicly owned companies show different intentions. that their ODI will take the form of either new direct The latter group is the most enthusiastic in anticipating investment/greenfield investment or merger and increased ODI intentions over the 12-month to 2-5-year acquisition of existing foreign companies or assets. Only periods, and largest drop in no ODI expectation over one-tenth are considering expansion or upgrading of their the same periods. existing facilities overseas (Figure 21).
The percentages indicating an expected increase in Fields of Future ODI Activities ODI for publicly owned companies escalate from 22% Trading, other manufacturing, and resource extraction, in 12-months to 62% in 2-5-years. All other types of handling or processing are the top three business companies, including SOEs, only increase from activities that have the strongest attraction for Chinese around the 20% range to the 35% range. Also, publicly companies’ ODI in the near future. owned companies record the largest decline of no ODI intention, and the percentages indicating no expected More than half the respondent companies indicate that ODI drop from 58% to only 10%. However, the other trading is the main area of their planned overseas three types of companies show a drop of average investment. About 18% and 7% respectively respond percentages indicating no expected ODI from 50% to that manufacturing and resource extraction are the main 30% (Figures 19, 20). areas of planned ODI (Figure 22).
FIGURE 21: FORM OF FUTURE ODI
275 of 296 companies (93%) 0% 25%50% 75%
Don’t know 56.0 New direct/greenfield investment 17.8 Merger/acquisition of existing companies or assets 16.0 Expansion or upgrading of existing-owned facilities 10.2
FIGURE 22: FIELDS OF FUTURE ODI ACTIVITIES
244 of 296 companies (82%) 0%25% 50% 75%
Trading 54.5 Other manufacturing 18.4 Resource extraction, handling or processing 7.0 Business services 5.7 IT products and services 4.9 Technical services 3.3 Other 3.3 Agriculture or agri-business 2.5 Financial services 0.4
– 21 – Industry Sectors of Future ODI 12% to 14% over the next 12 months and next 2-5 years. The top three industrial sectors most likely to attract By contrast, the figure for the US drops from 26% to 18%. Chinese companies considering ODI expansion within 2-5 years are automotive, food & beverages and mechanical & Motivation for Future ODI electrical. More than half of respondents in these sectors Possible future ODI by Chinese companies is driven expect to increase their ODI within the next 2-5 years. primarily by the business potential of overseas markets. On a scale of 1 (weakest) to 5 (strongest), business Although other sectors, such as energy, oil & gas, finance expansion gains the highest mark, 4.165, among all & insurance and real estate development, are also among motivations for future ODI. the top in future ODI intentions, their sample sizes are too small to confidently include them in the list (Figure 23). Almost equally important are considerations of security of the investment and business operation (4.164), a favourable Location of Future ODI tax system (4.155), as well as the importance of targeting Asia is likely to be the top recipient of Chinese ODI in markets (4.112) in the investment destination countries. the 12-month and 2-5-year periods, followed by Europe and North America. Government policy, notably Go Global and its related incentive measures as a push factor, influences Table 3 illustrates, for example, that 58 companies Chinese companies’ ODI decisions only as a secondary indicated they would put an average of 38% of their factor (3.885). possible ODI in Asia in the next 12 months, and 99 firms said they would put an average of 46% of their ODI Other motivations, such as access to natural resources in Asia in the next 2-5 years. and advanced technology, acquisition of internationally established brands, avoidance of trade barriers through Among North American countries, the respondent access to a regional trade bloc or a third country, etc. Chinese companies indicated they expected to are also among the key driving forces of future Chinese increase their average ODI share in Canada from ODI, but with a lower priority (Figure 24).
FIGURE 23: EXPECTED ODI INCREASES BY SELECTED INDUSTRY SECTORS
60%
53 50 50 50% 45 45
40 40%
30% 29 29 26 25 23 22
20% 19
In 12 months 10% 77 In 2-5 years
0 0 Note: Automotive Food & Mechanical Light Building Import Textiles Chemicals Sectors whose sample size beverage & electrical industry products & export is less than 10 companies are not included.
– 22 – TABLE 3: ESTIMATED FUTURE ODI, BY REGIONS
IN 12 MONTHS IN 2-5 YEARS
Number of Average Share Number of Average Share companies responding of ODI (%) companies responding of ODI (%)
Asia 58 38 99 46 Europe 35 26 59 25 North America, of which: 40 19 85 16 US 21 26 40 18 Canada 18 12 39 14 Mexico 1 10 6 9 Africa 17 13 41 15 Latin America 10 17 18 11 Oceania 4 10 12 10 Don’t know 141 — 98 —
FIGURE 24: MOTIVATION FOR FUTURE CHINESE ODI
3 3.2 3.4 3.6 3.8 4 4.2 4.4
Business potential/expansion 4.16 Security of investment 4.16
Tax system 4.16
Overall importance of target country as a market 4.11
Transparent and fair regulatory environment 3.91 Government Go Global policy and related incentives 3.88 Membership in regional free-trade arrangement 3.87 Government assistance 3.80 Availability of investment capital 3.74
Access to international standard management practices 3.69 Local labour union support 3.66 Access to advanced technology and R&D 3.61
Stagnant domestic market 3.56 Access to natural resources 3.50
Use of target country as base for exports to third country 3.47 Acquisition of established brands 3.46
Other (international market, exchange rate, etc.) 3.39
Rising domestic labour cost 3.27 Access to low-cost labour 3.26
Access to skilled labour 3.09
– 23 – 3.4 IS CANADA A DESTINATION FOR CHINESE ODI? Key Considerations on Investing in Canada Perception of Canada The most important attraction of Canada for Chinese Only 4% of respondent Chinese companies currently ODI is that the quality of life in Canada is among the have investment projects in Canada, and 8.4% are highest in the world. This receives a mark of 3.99 on considering the possibility of investing in Canada. What a scale of 1 (weakest) to 5 (strongest). is more interesting is 5.9% of respondents indicate that they had considered investing in Canada, but The next most important attraction is that Canada eventually decided not to go ahead (Figure 25). has easy access to the US and other key international markets. Canada’s abundant and reliable energy resources Chinese View of Attractive Investment to supply businesses and the level of technology are also Sectors in Canada well recognized. Potential Chinese investors also believe More than 40% of Chinese companies do not have that business costs and tax burdens are higher in a basic knowledge of sectoral investment opportunities Canada than in other developed countries, such as the in Canada. The least known Canadian industry sector US. However, other features of the Canadian investment for Chinese businesses is the auto and auto-parts environment, such as a diversified and dynamic labour industry, with almost half of respondent Chinese pool, are less appreciated by potential Chinese investors companies being unfamiliar with this sector. (Figure 26). Respondent Chinese companies consider ICT, energy and biotech as the most promising sectors for Larger Companies More Positive investment in Canada, followed by forestry, minerals, on Investing in Canada agriculture and agri-food and finally autos/auto-parts The likelihood of investing in Canada is almost double (Table 4). at 13.6%, for larger Chinese companies — those with
FIGURE 25: CHINESE COMPANIES’ ODI PERCEPTION OF CANADA
0%25% 50% 75% 100%
Currently have investment in Canada 4.0 96.0
Considering investment in Canada 8.4 94.6
Previously thought about investing in Canada but decided not to proceed 5.9 94.1
Yes No
TABLE 4: THE MOST PROMISING SECTORS IN CANADA
Ranking by The most promising sectors Voting Don’t Know voting score for investing in Canada are: Score (%)
1 ICT 3.91 42.9 2 Energy 3.85 47.3 3 Biotech 3.83 46.5 4 Forestry 3.79 44.6 5 Minerals 3.53 44.7 6 Agriculture and Agri-food 3.49 45.5 7 Autos and auto-parts 3.17 49.2
– 24 – FIGURE 26: KEY CONSIDERATIONS ON INVESTING IN CANADA
2.53.0 3.5 4.0 4.5
The quality of life is among the highest in the world 3.99 Can access the US and other key markets 3.85 Has abundant and reliable energy resources to supply your business 3.42 Offers the right technology for your investment 3.4 Business costs are higher than other developed countries, such as the US 3.32 Regulatory overhead, taxes higher than other developed.countries 3.32 Has greater business expansion opportunites than other developed countries 3.24 Compared to other industrial countries, a favourable investment destination 2.99 Has dynamic, diversified labour pool your investment requires 2.95
FIGURE 27: KEY CONSIDERATIONS ON INVESTING IN CANADA, BY COMPANY SIZE
3.03.43.8 4.2 4.6
The quality of life is among the highest in the world 3.89 4.26
Can access the US and other key markets 3.78 4.09
Has abundant and reliable energy resources to supply your business 3.27 3.83
Offers the right technology for your investment 3.28 3.68
Under Rmb 50 m. Rmb 50 m. and over
annual sales revenue of Rmb50 million and over, than FIGURE 28: CONSIDERING INVESTMENT TO CANADA, their smaller counterparts, at 6.9%. BY OWNERSHIP
Larger Chinese companies are also more positive than their smaller counterparts about the top four attractions to investing in Canada. Larger companies, 14% whose annual sales revenue is Rmb50 million and over, consistently give a significantly higher mark 12 12% on all factors than do their smaller counterparts (Figure 27). 10% SOEs Are More Likely to Invest in Canada
Although the publicly owned companies are more 8% 7.1 likely to start or increase their ODI globally, SOEs 7 are more interested in investment opportunities in 6 6% Canada.
The possibility of investing in Canada is much higher 4% for Chinese SOEs than for other types of companies. SOE Publicly Private Foreign Some 12% of SOEs are considering investment in owned funded Canada, compared with only 6-7% for other types companies (Figure 28).
– 25 – CONCLUSION
4
In an attempt to clarify some of the misconceptions operating overseas at the moment. However, there are about Chinese ODI, this study has attempted to clear indications that non-SOEs, particularly private develop a greater understanding of how and why companies, are nurturing global ambitions and China’s outward FDI policies and practices have following the SOEs into world markets, although most developed, with some specific reference to Canada. of them are small and medium-sized companies. In Based on both theoretical and empirical analysis, this general, publicly owned Chinese companies are more report finds that: interested than SOEs in investing abroad.
China’s ODI is essentially policy driven. The results of the China’s ODI interest goes beyond energy. Recent energy APF Canada-CCPIT survey of 296 companies clearly deals involving Chinese companies have caught indicate that Chinese ODI interest is essentially policy worldwide attention. However, the survey indicates driven — motivated by the government’s Go Global that Chinese enterprises are interested in a much policy and its related incentives. In the past two wider range of industries than just energy. Trading, decades, China’s overseas investment policy has gone manufacturing and resource extraction, handling or through strategic shifts, moving from the political processing are the top three targets for Chinese objective-centred to the commercial interest-oriented; companies that have the intention to invest overseas from central government-dominated to local government- within the next few years. The top target industries are led and then to enterprise-led; and from resource-seeking autos and auto parts, food and beverages and mechanical to the trinity of resource-, market- and technology- and electrical machinery. seeking ODI. Specifically, the government has made a considerable effort in such areas as creating Chinese firms have to learn more about ODI operations. incentives, streamlining administrative procedures, As new players on the global scene, Chinese companies easing capital controls, providing information and have much to learn in the area of overseas investment. guidance and reducing investment risks. The overall They are often unprepared to deal with the competitive result is that China’s ODI has begun to rise rapidly, global business environment. When they venture although in total it is still quite small. abroad, they often have misconceptions about the host countries. Their business plans generally fail to address China’s ODI is set to rise. Given this favourable policy the business climate, marketing, operational efficiency, background, some Chinese firms are eager to enter global and regulations of the host economies. The survey markets. The survey found that 23% of respondents shows that the majority of companies (56%) are unsure intend to increase their ODI within the next 12 months of the business model they will employ in future and that over 40% intend to invest overseas within 2-5 investments. Thus Chinese companies need help to years. This finding should not be interpreted as Chinese “go global.” firms overlooking their domestic market. However, global markets are gradually being recognized by an Canada is very faint on China’s ODI radar screen. With increasingly number of Chinese companies as a China becoming a global investor, the challenge for necessary to expansion beyond the often over-supplied Canada is to find ways to benefit from the Chinese domestic market. capital. The survey results do not seem to provide reason for optimism as Canada is not among the prime China’s ODI players are diversified. The statistics show targets for Chinese expansion. Only 8% of Chinese that larger Chinese SOEs are the dominant players companies are considering investing in Canada and of
– 26 – those Canada is likely to receive only 12-14% of their However, to be more specific to the needs of Chinese possible future ODI. Last year, Canada received just investors and more effective at attracting China’s ODI, US$5.12 million — less than 0.1% — of Chinese the following aspects require more attention: investment, bringing the total Chinese stock in Canada needs to establish a mechanism for policy Canada to US$58.79 million — 0.13% of Chinese total dialogue with China through which each country ODI stock (by Chinese figures; Canadian figures put can achieve a better understanding of the nature the total stock last year at C$220 million, representing and changing direction of their respective 0.06% of total FDI stock in Canada). This country was investment policies, because government policy is not among the top 20 destinations of Chinese ODI the driving force of China’s ODI. measured by either flow or stock. Canada needs to send a clearer message to Chinese investors about sectoral investment However, Canada used to be among the hotspots in opportunities in Canada, beyond the energy sector. receiving Chinese ODI. According to an UNCTAD More than 40% of survey respondents report that report (based on official statistics supplied by China), they do not have a basic knowledge of investment Canada was the third-highest recipient of Chinese opportunities in Canada. approved cumulative ODI in the period 1979-2002, Canada needs to establish a stronger image of following Hong Kong and the United States. During its business environment. Chinese firms the period, the total number of Chinese ODI projects in consider Canada to be a good place to live and Canada was 144, amounting to US$436 million of for sightseeing, but not necessarily for doing investment value.1 This represents 2% of total Chinese business. global ODI projects and 5% of total Chinese global ODI Canadians will have to do more homework on value respectively. Clearly much of the investment dealing with diverse business interests and needs came in the earlier years of the period and the latest that not only differ from those of Canadians, but figures suggest that Canada has not held its priority in also differ within China. China’s ODI players range Chinese investment plans. from large to small SOEs, non-SOE listed public companies and small private companies. Canada can do a better job of attracting Chinese capital. Canadians should work harder in offering a wider It is not a new suggestion that Canada can do a range of choices for Chinese investors to better job of attracting FDI, including from China, in consider as Chinese companies need help in order to improve its competitive position and exploring suitable business models for the economic potential. In fact Canada has begun the job international market. in China. This country is one of the growing number that is hoping to attract investment represented at The bottom line is that it is in Canada’s interest to create the China International Fair for Investment & Trade the conditions to facilitate Chinese ODI to Canada, in Xiamen. In 2004, Canada sent its largest-ever on terms that meet normal Canadian regulatory delegation, led by the Investment Partnerships requirements. Canada’s government agencies could Branch of International Trade Canada, to attend the help by making Chinese investors better aware of event. It mounted a one-day forum on Investing in opportunities in Canada, as well as ensuring that Canada, and a half-day seminar on the China-Canada the Canadian business community understands the Automobile Industry – Investment Opportunities in business models that are familiar to Chinese the China-Canada Auto Industry. investors.
– 27 – Promoting two-way investment is key to a Canada-China strategic partnership. In September 2005, when Chinese President Hu Jintao visited Ottawa, Canada and China agreed to build a strategic partnership aimed at promoting the long-term and steady development of bilateral relations. Promoting two-way investment is a major component of such a strategic partnership. The two countries are also aiming to double their total trade by 2010 from US$16 billion in 2004. If the theory of trade following investment holds true, promoting two-way investment would definitely accelerate trade growth. As evidence of this, in China FDI generated 57.81% of total imports and 57.07% of total exports in 2004.
China’s ODI can be a win-win for China and the rest of the world. The emergence of China as a global investor reflects not only China’s increasing integration with the global economy but also its continuing need to find overseas markets. After the rapid industrial growth in the early stages of its economic modernization, China has developed overcapacity in some sectors, which the saturated domestic market cannot absorb. Outward FDI opens a channel to tap into new markets. It is also a strategy that Chinese companies can employ to circumvent trade barriers. Because of its poor endowment in some natural resources, Beijing needs to ensure stable raw material supplies, which the ownership of overseas mines and oil fields can provide. In order to maintain competitiveness in manufacturing, foreign investment provides a channel for Beijing to acquire advanced technology, modern manufacturing know-how and world recognized brands. Finally, China certainly has the capability to rapidly build up its overseas stake. With foreign exchange reserves in excess of US$710 billion, Beijing has to find ways to channel its surplus earnings away from the domestic economy or face excessive growth in its money supply and risk politically damaging inflation. Investing some of the funds overseas seems like a win-win situation for China and the rest of the world.
– 28 – ANNEX A: APF CANADA/CCPIT SURVEY WEBSITE
WELCOME TO THE APF CANADA/CCPIT INVESTMENT INTENTIONS SURVEY Here are a few tips on how to respond to this survey. To enter the survey, please type in the telephone number of your firm in the box below and click on the “Authenticate” button. Next, click on the hyperlink verifying your company name to enter the survey. If you are on a dial-up server and experience a line-drop mid way through your survey, don’t worry; all you have to do is return to this landing page and type in your telephone number to re- access your survey. If you have problems accessing the survey, please contact Kenny Zhang: Kenny Zhang, Research Analyst Asia Pacific Foundation of Canada 999 Canada Place, Suite 666 Vancouver, BC V6C 3E1 Tel: 604-684-5986
Information disclosed in this survey shall remain confidential and will not be sold or otherwise transferred to unaffiliated third parties. The information is disseminated and reviewed internally to allow APF Canada/CCPIT to understand investment intentions of its members.This survey is optional. Any information submitted herein is provided on a voluntary basis. By participating in this survey, you are agreeing to these terms and conditions.
By entering your telephone number in the box below and participating in this survey, you are authorizing APF Canada/ CCPIT to use the information as indicated above.
Telephone # :
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BEGIN SURVEY
– 29 – ANNEX B: QUESTIONNAIRE ON INVESTMENT INTENTIONS OF CCPIT MEMBERS
NOTE: Thank you for taking the time to fill out this Mines, metals and minerals questionnaire. There are four sections in this survey, and please Consulting answer relevant questions by following the instruction at the Construction contracting beginning of each section. Your response will be strictly Finance & insurance confidential and the results of this survey will not make any Health services reference to specific enterprises. Import & export Legal & accounting services 1 General Information About Your Company Real estate development Instruction: In this section, we will ask you for some Tourism general background about your company. Wholesale & retail trade Transportation & logistics 1.1 What was the annual gross revenue of your ICT company last year? (in Chinese Rmb) High-tech Miscellaneous/Others Under RMB 1 million RMB 1-9 million 2 Past & Present Overseas Investment RMB 10-49 million Instruction: In this section, we will ask you about RMB 50-100 million your company’s involvement in overseas Over RMB 100 million investment in the past and present. 1.2 What percentage of your company’s gross 2.1 When did your company first invest overseas? revenues comes from overseas business activities, such as exports, offshore manufacturing ______(Actual year, “0” = No Investment) and sales, etc.? If “0”, then go to Section 3. 0% 2.2 In which regions do you have an overseas 1-10% operation, Please provide country name, if 11-25% possible. (Please tick all that are applicable) 26-50% 51-75% Africa 76-100% Asia Europe 1.3 What is the nature of your company? Latin America North America SOE Oceania Publicly listed Private 2.3 Which of the following categories best describes Foreign invested JV the type of your current overseas business? Wholly owned foreign enterprise (Please tick all that are applicable) 1.4 Which of the following categories best describes Representative office the sector that your company works in? (Tick one) Agent Sales office Aerospace and aviation Manufacturing facility Automotive Sourcing/distribution centre Building products Other ______Chemicals Food & beverages 2.4 Which of the following categories best describes Light industry the main area of your current overseas business? Mechanical & electrical (Please tick one) Pharmaceuticals Textiles Resource extraction, Agriculture, fisheries & forestry handling or processing Energy, oil and gas Agriculture or agri-business IT products and services
– 30 – Other manufacturing Business potential Trading 1 2 Financial services 3 4 Business services 5 Technical services Access to natural resources Other ______1 2 3 4 2.5 How was the investment in your 5 establishment accomplished? Access to skilled labour Newly built/greenfield investment 1 2 Merger/acquisition 3 4 Joint venture 5 Access to low cost labour 2.6 Which of the following statements describes 1 2 best the ownership of your establishment? 3 4 Wholly Chinese owned (=100%) 5 Predominantly Chinese owned Access to advanced technology and R&D (>50% & <100%) 1 2 Partially Chinese owned (<=50%) 3 4 5 2.7 On a scale of 1 (weakest) to 5 (strongest), how would you rate the following PUSH factors in China that have Access to international standard influenced your past overseas investment decisions? management practices 1 2 Govt. Go Global policy & related incentives 3 4 1 2 5 3 4 5 Acquisition of established brands 1 2 Stagnant domestic market 3 4 1 2 5 3 4 5 Others, please specify: ______1 2 Availability of investment capital 3 4 1 2 5 3 4 5 2.9 On a scale of 1 to 5, how would you rate the Rising domestic labour cost following OTHER factors that have influenced your 1 2 past investment location choice? 3 4 Transparent and fair regulatory environment 5 1 2 Others, please specify: ______3 4 1 2 5 3 4 Tax system 5 1 2 3 4 2.8 On a scale of 1 (weakest) to 5 (strongest), how 5 would you rate the following PULL factors from the Government assistance destination country that have influenced your past 1 2 overseas investment decisions? 3 4 5
– 31 – Local labour union support decrease 1 2 no investment 3 4 don’t know 5 Overall importance of target country as a market 3.3 Which of the following methods does your 1 2 company intend to use in its future overseas 3 4 investment: 5 New direct investment/greenfield Membership in a regional free trade arrangement, investment e.g., NAFTA, ASEAN, etc. Expansion or upgrading of existing 1 2 company-owned facilities 3 4 Merger or acquisition of existing 5 companies or assets Don’t know Use of target country as base for exports to third country 3.4 Please give an estimated percentage of investment 1 2 that your company is most likely to make in the 3 4 following regions/countries in the next 12 months? 5 (Please note: should add up to 100%) Safe security Africa % 1 2 Asia % 3 4 Europe % 5 Latin America % Others, please specify: ______North America, in which: 1 2 US % 3 4 Canada % 5 Mexico % Oceania % 2.10 Overall, how do you describe the success of Don’t know your company’s current overseas investment? very satisfied 3.5 Please give an estimated percentage of investment somewhat satisfied that your company is most likely to make in somewhat dissatisfied any of the following regions/countries in the very dissatisfied next 2-5 years. too soon to determine Africa % Asia % 3 Overseas Investment Intentions Europe % Instruction: In this section, we will ask you about Latin America % your company’s intention of overseas investment North America, in which: in the future. US % Canada % 3.1 During the next 12 months, does your company Mexico % expect overseas investment to: Oceania % increase substantially Don’t know increase moderately stay about the same 3.6 Which of the following categories best describes decrease the type of your future overseas business? no investment (Please tick all that are applicable.) don’t know Representative office Agent 3.2 During the next 2-5 years, does your company Sales office expect overseas investment to: Manufacturing facility increase substantially Sourcing/distribution centre increase moderately Other ______stay about the same
– 32 – 3.7 Which of the following categories best describes Access to low cost labour the main area of your planned overseas 1 2 investment? Please tick one: 3 4 Resource extraction, 5 handling or processing Access to advanced technology and R&D Agriculture or agri-business 1 2 IT products and services 3 4 Other manufacturing 5 Trading Access to international standard Financial services management practices Business services 1 2 Technical services 3 4 Other ______5 Acquisition of established brands 3.8 On a scale of 1 (weakest) to 5 (strongest), how will you 1 2 rate the following PUSH factors in China that will 3 4 influence your future overseas investment decisions? 5 Govt. Go Global policy & related incentives Others, please specify: ______1 2 1 2 3 4 3 4 5 5 Stagnant domestic market 1 2 3.10 On a scale of 1 (lowest) to 5 (strongest), how will you 3 4 rate the following OTHER factors that will influence on 5 your investment location choice? Availability of investment capital Transparent and fair regulatory environment 1 2 1 2 3 4 3 4 5 5 Rising domestic labour cost Tax system/tax incentives 1 2 1 2 3 4 3 4 5 5 Others, please specify: ______Government assistance 1 2 1 2 3 4 3 4 5 5 Local labour union support 3.9 On a scale of 1 (lowest) to 5 (strongest), how will you 1 2 rate the following PULL factors from the destination 3 4 country that will influence your future overseas 5 investment decisions? Overall importance of target country as a market Business potential 1 2 1 2 3 4 3 4 5 5 Membership in a regional free trade arrangement, Access to natural resources e.g., NAFTA, ASEAN, etc. 1 2 1 2 3 4 3 4 5 5 Access to skilled labour Use of target country as base for exports to 1 2 third country 3 4 1 2 5 3 4 5
– 33 – Safe security Canada has abundant and reliable energy 1 2 resources to supply your business. 3 4 1 2 5 3 4 Others, please specify: ______5 DK 1 2 Canada offers the right technology for 3 4 your investment. 5 1 2 3 4 4 Investment to Canada 5 DK Instruction: In this section, we will ask you about Canada can access US and other key markets. your company’s perception of investment in Canada. 1 2 3 4 4.1 Does your company currently have investment 5 DK in Canada? The quality of life in Canada is among the Yes No highest in the world. 1 2 4.2 Is your company considering an investment 3 4 in Canada? 5 DK Yes No The most promising sectors for investing in Canada are: 4.3 Did your company previously think about Energy investing in Canada, but decide not to go ahead? 1 2 Yes No 3 4 5 DK 4.4 On a scale of 1 (strongly DISAGREE) to 5 (strongly Minerals AGREE), please rate the following statements when your 1 2 company is considering investment in Canada. 3 4 (DK=Don’t Know) 5 DK Compared to other industrial countries, Canada is Forestry a favourable destination for foreign investment. 1 2 1 2 3 4 3 4 5 DK 5 DK Agri-food Canada has the dynamic and diversified labour 1 2 pool that your investment requires. 3 4 1 2 5 DK 3 4 Autos 5 DK 1 2 Business costs in Canada are higher than other 3 4 developed countries, such as the US. 5 DK 1 2 ICT 3 4 1 2 5 DK 3 4 Doing business in Canada has greater expansion 5 DK opportunities than other developed countries. Biotech 1 2 1 2 3 4 3 4 5 DK 5 DK Canada has a business environment with more regulatory overhead and a higher tax burden than other developed countries, such as the US. 1 2 3 4 5 DK
– 34 – ANNEX C: OUTLINE OF MAJOR CHINESE OVERSEAS CORPORATE INVESTORS
999 Group maker of computer monitors, after buying 26% of the company The 999 Group was incorporated in 1991 in Shenzhen. It is one for US$135 million. In 2005, BOE announced that the fifth- of China’s largest traditional herbal medicine producers. Since generation TFT-LCD line has successfully begun the mass the end of the 1980s, the group has established subsidiaries in production at its Beijing plant. Hong Kong, Malaysia, the US, Russia, South Africa and Germany, although most of them have not been successful due to their China National Petroleum Corporation (CNPC) lack of experience in foreign markets. State-owned China National Petroleum Corporation (CNPC) serves as China‘s largest producer and supplier of crude oil In 2003, the Group purchased 51% of Japan East Asia Pharmacy. and natural gas, ranking tenth among the world’s top 50 Since September 2003, all the medicines produced by Japan petroleum companies, according to Petroleum Intelligence East Asia Pharmacy have been branded “999,” which enabled Weekly in 2001. CNPC is also a major producer and supplier them to enter the Chinese market. Meanwhile, some 100 of refined oil products and petrochemicals, and one of the Chinese traditional herbal medicines produced by the group largest service suppliers in the global petroleum and have been able to enter the Japanese market. Chinese traditional petrochemical industries. herbal medicines are normally categorized as health food supplements in developed countries because they usually have CNPC has 13 large oil and gas field enterprises, 16 large-scale very strict approval procedures for foreign medicines. It may take refining and petrochemical companies, 19 marketing more than five years to win approval of a new medicine. The companies, a large group of R&D units, and a technical service marriage between the two enterprises helped the group shorten and mechanical manufacturing enterprise located in China. In the approval procedure greatly. 2003, CNPC’s annual crude oil production totalled 122.428 million tons, and annual natural gas production totalled 26.27 In 2001, the group established the first 999 pharmaceutical clinic billion cubic meters. in Toronto, Canada. To date, more than 50 pharmaceutical clinics have been set up in Austria, the US, England, Holland, CNPC also has nearly 30 oil and gas exploration, development Japan and Hong Kong, as well as several other locations, all of and production projects in the Middle East, North Africa, which contribute considerably to the sales of 999 products. Central Asia, Russia and South America. CNPC expanded its overseas exploration activities exponentially in recent years. BOE Technology Group Co. Ltd. Its overseas investment totalled US$4.2 billion at the end of BOE was incorporated in 1993 in Beijing. Its stock has been 2003, covering 19 countries including Sudan, Kazakhstan and listed as B-shares and A-shares on the Shenzhen Stock Exchange Venezuela. since June 1997 and January 2001 respectively. BOE is a manufacturer of display devices and related electronic parts and After nearly 50 years’ development, CNPC has greatly components such as TFT-LCD(thin-film transistor liquid-crystal boosted its competitiveness to bid on all sorts of field and display), CRT, STN-LCD, OEL and VFD as well as mobile technical service projects, both domestic and overseas. In digital products and IT services. 2003, 40 seismic crews provided services in 17 countries including Sudan, Nigeria, Libya, Algeria, Iran, Mexico, BOE has extensive experience in TV and computer display research, Ecuador, Pakistan, Yemen, Kazakhstan, Oman, United Arab development and manufacturing, including an LCD panel Emirates, Saudi Arabia, Myanmar, Indonesia, Albania and fabrication plant in South Korea with yearly capacity of 3.5 Venezuela. million units. BOE has built a fifth-generation LCD fabrication plant in Beijing, at a cost of US$1.2 billion. China National Offshore Oil Corp. (CNOOC) China National Offshore Oil Corporation (CNOOC) is a state- In 2003, BOE paid US$380 million for a TFT-LCD unit of South owned oil company incorporated in 1982. CNOOC is Korea’s Hynix Semiconductor Inc. The purchase was one of the authorized by Chinese law to explore for oil and gas resources largest overseas forays by a Chinese technology firm. The company offshore of China in cooperation with foreign partners. It has acquired its own LCD production line through this takeover. established six business sectors: oil and gas exploration and development, technical services, logistic services, chemical and In 2003, BOE became the controlling shareholder of Hong fertilizer production, natural gas and power generation and Kong and Singapore-listed TPV Technology Ltd., the world’s top financial services.
– 35 – In 2004, CNOOC realized sustained growth in oil and gas COSCO Group output. It generated sales revenue of US$8.9 billion and net Founded on April 27, 1961 as the pioneer of the Chinese shipping profit of US$3 billion. Oil and gas output reached 36.48 million industry, COSCO has become a conglomerate that operates in tons of oil equivalent. diversified fields, but mainly focusing on shipping and modern logistics businesses. The group also serves as an independent In 2002, CNOOC agreed to pay US$585 million for the Indonesian shipping agency and provides services in freight forwarding, ship oil operations of Repsol, which made CNOOC the largest offshore repairing, terminal operation, container manufacturing, trade, oil producer in Indonesia. CNOOC bought nine Repsol subsidiaries financing, real estate and IT. COSCO Group owns and operates that operate in five oil and gas fields. It bought working reserves 550 modern merchant ships with a total carrying capacity of up that were estimated at 360 million barrels of oil equivalent, which to 30 million DWT. It has ranked first in the international bulk boosted the company’s production by around 17%. shipping sector for years and is listed as one of the top 10 container liner operators in the world. In 2003, CNOOC paid US$347 million to acquire an interest in the upstream production and reserves of Australia’s North West In China, COSCO’s subsidiaries are scattered across Shelf Gas Project (NWS Gas Project). Under the terms of the Guangzhou, Shanghai, Tianjin, Qingdao, Dalian, Xiamen and deal, the company assumed a 25 % interest in the China LNG Hong Kong. They own and operate various types of container Joint Venture (CLNG joint venture), which was established to ships, bulk carriers, oil tankers and specialized carriers. COSCO supply LNG from the NWS Gas Project to the Guangdong LNG has also formed a transnational operating network capable of terminal. In the same year, the partners in the massive Gorgon reaching all major areas of the world. Ships and containers with natural gas field off the coast of Western Australia agreed to sell the “COSCO” logo are shuttling among 1,300 ports in more a 12.5% stake in the field to CNOOC. than 160 countries and regions around the world.
In 2005, CNOOC made a bid for US-based UNOCAL, but dropped In 1980, COSCO established its first subsidiary in Holland, its US$18.5 billion all-cash offer in August in the face of political CROSS-OCEAN. Since then COSCO has set up more than opposition in the US Congress. 50 subsidiaries or joint ventures abroad, including COSCO Corporation (Singapore) Ltd., COSCO Investment (Singapore) China Worldbest Group Co. Ltd. Ltd., COSCO (Hong Kong) Group, COSCO Container Lines Established in 1992 and headquartered in Shanghai, the China Americas Inc., and COSCO Canada Inc. Worldbest Group specializes in the design and manufacture of a range of plush toys, gifts, toy accessories and clothing, crafts and Haier Group textile products. Currently the main export markets for the Haier was incorporated in 1984 in Qingdao, Shandong province. Group are the US, Europe and Australia. The company currently manufactures a wide range of household electrical appliances — 15,100 varieties of items in 96 product China Worldbest is the largest textile group and also the largest lines — and exports products to more than 100 countries. In pharmaceutical group in China. Its life sciences business covers 2004, Haier’s global sales hit C$15.6 billion and the Haier the biologicals, pharmaceuticals and healthcare sectors. The brand, valued at C$9.4 billion, topped all Chinese trademarks textile business comprises an integrated R&D, production and in a nationwide survey. On April 18, 2005, Haier was ranked marketing system. 89th of the 2005 World’s 500 Most Influential Brands by the World Brand Lab. The group has established many overseas subsidiaries and branches in North America, Europe, West Africa, Central Asia Haier encompasses global networks for design, procurement, and Southeast Asia, among which its investments in Mexico and production, distribution and after-sales services. It has Canada are the largest by Chinese enterprises in the respective established 10 manufacturing complexes, 30 overseas production local manufacturing industries. factories, eight design centres and 58,800 sales agents worldwide. The Group invested US$96 million to establish a 100,000- spindle cotton spinning plant in Obregon in Mexico in 2001. Over the past 20 years, Haier provided more than 100 million It also invested US$35 million near Montreal for a knitting, appliances to consumers worldwide. Haier’s leadership position printing and dying project, which formally went into operation in in the Chinese home appliance industry has been solidified by April 2002 (but has subsequently been mothballed). Moreover, obtaining a 21% domestic market share for overall appliances, China Worldbest Group has established close relationships with 34% for whitegoods, and 14% for small electric appliances, some well-known US and Canadian universities and scientific overtaking all rivals. In the world market, Haier has gained first research institutes, which are engaged in biotechnology, drug place in the US for sales of compact refrigerators and wine R&D and healthcare. coolers, in Iran for washing machines and Cyprus for air
– 36 – conditioners. According to Euromonitor Statistics, Haier is core business, electricity metres, dominates the local market, ranked fourth in terms of revenue from the global sales of which has enabled the company to become the biggest whitegoods. electricity metre manufacturer worldwide.
On March 4, 2002, Haier unveiled its American headquarters in In 2000, it established its first overseas plant in Thailand. a landmark neo-classical building, the former offices of the Subsequent investments have been made in South Asia, South Greenwich Savings Bank, in Manhattan, New York; an indication America, Africa and Eastern Europe, forming a global chain of that Haier had moved into a new phase for globalization of metre manufacturing and sales operations. In 2001, Holley product design, manufacture and sales and is set on long-term established a subsidiary in the US, which then purchased Pacific development in the US. In 2005, Haier made a US$1.3 billion Systems Control Technology Inc., a company traded on offer for ailing appliance-maker Maytag, the US maker of Hoover NASDAQ. vacuum cleaners, but retracted its offer in July. Constant innovation is the driving force of Holley’s development. Hisense Group Co., Ltd. Holley has a technology team of over 500 technical personnel in Headquartered in Qingdao, Shandong, Hisense is a high-tech the US and Canada and in Hangzhou, Beijing, Shanghai, enterprise, specializing in electronics, household appliances, and Shenzhen in China. In 2001, Holley bought a mobile communication, IT, real estate, commerce and trade phone chip-design business with operations in San Jose, development. The company has experienced 35 years of California, Dallas, Texas and Vancouver from Dutch development, and now has more than 20 subsidiary companies electronics firm Philips, becoming China’s first enterprise in at home and abroad. the information industry to obtain key CDMA technology through an overseas buyout. Hisense set up its first TV assembly plant in South Africa in 1996. In 2001, the Hisense Group increased its investment in South Shougang Group Corp. Africa and purchased the South Africa factory of collapsed South Established in 1919 in Beijing, Shougang was the first firm to Korean group Daewoo at a cost of US$4 million. produce steel in China. Now the Shougang Group has become a transnational corporation with its business encompassing iron Hisense is believed to be the first Chinese TV producer to receive and steel manufacturing, real estate, trade, construction and US contracts since the US Department of Commerce passed capital management, among other areas. Its main export an anti-dumping ruling in 2003. Hisense exports more than markets are Asia and North America. 400,000 digital receivers to US Digital Television Inc. every year. The group exports its products to about 100 countries in Europe, Since 1992, Shougang Holding (Hong Kong) Ltd. has successfully Africa, Southeast Asia and America. In addition, Hisense has acquired four listed companies on the Hong Kong Stock established subsidiaries and trade offices in the US, Japan, Exchange: Shougang Concord International Enterprises Co. Ltd.; Brazil, Indonesia, the Middle East, Australia, Hong Kong SAR Shougang Concord Grand (Group) Ltd.; Shougang Concord and Italy. Technology Holdings Ltd; and Shougang Concord Century Holdings Ltd. Hisense operates a Technical Park as a state-of-art R&D centre for product design and development, as well as being a In 1992, the Shougang Group paid US$118 million for the state- prominent post-doctoral research centre. The group has been run Hierro Peru mine 325 km south of Lima. Shougang thus playing a leading role in the Chinese electronics industry, based became the largest Chinese enterprise in South America at that upon its efficient technology innovation team. In the first time. Shougang holds 98.4% of the shares of Hierro Peru and quarter of 2005, sales of the Hisense brand LCD TV ranked No.1 owns the concession right to develop all the resources in a 670.7 in the Hong Kong market among all the major Chinese brands. sq. km. area without a time limit. Its main products are low- sulphur coarse concentrate, fine concentrate, blast furnace Holley Group Co. Ltd. pellets and direct reduction pellets. Some 70% of the products With more than 30 years’ history, the Holley Group is a are exported to North America and Asia, while the remainder is trans-regional, multi-industry and export-oriented enterprise, sold in Peru. with four publicly listed companies (three domestic and one on NASDAQ). The company’s businesses cover metrological TCL Group instruments, power equipment, information technology, Founded in 1981, with headquarter in Huizhou, Guangdong, the biopharmaceuticals and real estate. Its domestic bases are in TCL Corporation is a leading multimedia consumer electronics Hangzhou, Chongqing, Kunming, Guangzhou, Beijing, product manufacturer in China and elsewhere in Asia. TCL has Shenyang and Hainan, along with manufacturing plants and been developing an overseas market since 1998. To date its products research institutions in Thailand, the US and Canada. Holley’s have covered more than 100 countries, reaching 150 million
– 37 – consumers. The group has established manufacturing plants and business branches in Hong Kong, Vietnam, Germany, the US, Russia, India, the Philippines, Indonesia and Singapore.
In 2002, TCL purchased German TV maker Schneider Electronics AG for about US$8.2 million. TCL acquired the production line, inventory and trademarks of Schneider and Dual of Schneider Electronics AG, a company with more than 100 years of operation. TCL also established its manufacturing base in Germany. The takeover has helped TCL to expand its business in Europe, and the Schneider brand has provided TCL with access to a worldwide distribution network.
In 2004, TCL International Holdings and French electronics maker Thomson SA combined their TV and DVD businesses to create the world’s biggest television maker — a marriage between the biggest TV sellers in China and the US. The venture helped TCL circumvent anti-dumping rules in the US and European markets as it pursues its ambition to become a global brand. A joint venture, two-thirds owned by fast-growing TCL and one-third by Thomson, produces 18 million TVs and DVD players a year and has annual sales of more than US$3.5 billion.
Also in 2004, TCL and Alcatel Mobile Phones Limited (TAMP), a new global handset company, was jointly set up by TCL and the French company Alcatel, which cooperates in the development of next generation handset technologies through the sharing of R&D resources and distribution networks.
Wanxiang Group Wanxiang was established as a township enterprise in 1969 in Zhengjiang province. To date it has become the leading private company in the automotive parts industry, and a reliable supplier of universal joints, bearings and CV joints to customers in over 40 countries. Wanxiang America Corporation, based in Chicago, provides full-line customer service to the US, Canada, Latin and South America and Europe. In 1997, Wanxiang purchased AS Co. in England, enabling its products to enter the European market. Wanxiang became the first Chinese company to become a supplier to General Motors Co.
The group has bought more than 10 overseas companies in the past few years. The Wanxiang Group has established 26 subsidiaries in seven countries including Canada, the US, Britain and Germany in recent years. In 2000, Wanxiang merged with several listed companies, including US-based, NASDAQ-listed Universal Automotive Industries, becoming the first private Chinese enterprise to merge with an overseas company. In 2003, Wanxiang became the biggest shareholder of Rockford, a veteran global supplier of first-class automobile parts, as well as one of the oldest axle manufacturers in the US. As a result, Wanxiang Group wins orders worth US$80 million for axles every year.
– 38 – ANNEX D: SUMMARY OF CHINA’S INVESTMENTS IN CANADA
According to Chinese statistics cited in UNCTAD’s World as a source of the FDI stock in Canada in 2004. The Chinese Investment Report 2004, The Shift Towards Services, Canada total, according to Canadian statistics, was C$220 million, was the third-largest recipient of cumulative approved Chinese representing 0.06% of total FDI stocks in Canada. The ODI in 1979-2002, following Hong Kong and the US (See Table performance of Chinese ODI in Canada in past 15 years is shown D2, page 41). During this period, the total number of Chinese in Figure D1. ODI projects in Canada was 144, amounting to US$436 million in value. The investment in Canada represents 2% of total China’s investment in Canada has gone well beyond the energy Chinese global ODI projects and 5% of total outstanding Chinese and natural resources sectors to cover industries from agri-food global ODI value. Canadian statistics show that China ranked 27th and textiles, to biotech and health-care. Table D1 lists some examples of Chinese-invested companies in Canada.
FIGURE D1: CHINESE FDI IN CANADA
250 450
400 200 350 150 300
100 250
200
50 $ Millions Percentage 150 0 100 -50 50
-100 0
1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004
Source: Statistics Canada, CASIM 376-0051, May 2005 Growth (%) Chinese FDI
TABLE D1: CHINESE INVESTED COMPANIES IN CANADA
Company Name Prov. Activities Industrial Sectors Parent Companies
Yan Hai (Canada) BC Representation Agri-food, Textiles, Hebei Shenglun Import & Enterprises Ltd. Purchasing Consumer Products, Export (Group) Corp. Industrial Products
Air China BC Representation Airline Air China Limited (Vancouver Office) Customer Support
China Eastern BC Representation Airline China Eastern Airlines Co., Ltd Customer Support Airlines Corp. Ltd. (Vancouver Office) WorldBest (Canada) PQ Production Biotechnology China WorldBest Group Corp. Industries Inc. Manufacturing
– 39 – TABLE D1 continued:
Company Name Prov. Activities Industrial Sectors Parent Companies
China WorldBest BC Representation, Purchasing Biotechnology China WorldBest Group Corp. Group Co., Ltd., Sales, Customer Support Trade-Wholesale (Chief Representative Office in Canada) China State Construction BC Representation, Construction China State Construction International Co. Ltd. Customer Support Engineering Corp. (CSCEC) (Vancouver Office)
Jiang Quan Enterprises Ltd. BC Representation Construction Jiang Quan Enterprises Ltd.
Top-Glory Enterprises BC Representation, Consumer Products China National Cereals, Oils & (Canada) Ltd. Purchasing, Sales Industrial Products Foodstuffs Imp. & Exp. Corp.
Bank of China (Canada), ON Representation, Customer Support Finance Bank of China (Toronto Headquarters) Service Delivery
Bank of China (Canada), BC Representation, Customer Support Finance Bank of China (Vancouver Branch) Service Delivery
Tricell Forest Products Ltd. BC Purchasing Forestry China National Light Industrial Products Imp. & Exp. Corp.
Beijing Tong Ren Tang BC Sales Health-care Beijing Tong Ren Tang Co. Ltd. (Canada) Ltd. Holley Communications BC Representation, R&D/Design/Intelligence High Tech Holley Communications Canada Inc. Distribution, Customer Support Telecommunications Service Delivery
SHMG Equipment BC Representation, Industrial Products Shenyang Heavy (Canada) Corp. Distribution, Machinery Group Co. Ltd. Sales, Customer Support Prima Electronics Inc. BC Representation, Sales Manufacturing Xiamen Overseas Chinese Consumer Products Electronic Co. Ltd. China Travel ON Representation, Sales Tourism China Travel Service Service (Canada) Inc. (Hong Kong) Ltd. (Toronto Office)
China Travel BC Representation, Sales Tourism China Travel Service Service (Canada) Inc. (Hong Kong) Ltd. (Vancouver Office)
China Shipping (Canada) BC Customer Support Transportation China Shipping Group Agency Co. Ltd. Service Delivery
Cosco Canada Inc. AB Customer Support Transportation COSCO Group (Calgary) Service Delivery
Cosco Canada Inc. NS Customer Support Transportation COSCO Group (Halifax) Service Delivery
Cosco Canada Inc. ON Customer Support Transportation COSCO Group (Mississauga) Service Delivery
Cosco Canada Inc. PQ Customer Support, Transportation COSCO Group (Montreal) Service Delivery Cosco Canada Inc. BC Customer Support, Transportation COSCO Group (Vancouver) Service Delivery Sinotrans Canada Inc. BC Representation Transportation Sinotrans Beijing Packing & Transportation Co.
– 40 – TABLE D2: CHINA’S APPROVED FDI OUTFLOWS, TOP 30 DESTINATIONS, 1979-2002 (Millions of dollars)
1999 2000 2001 2002 1979-2002
Cumulative Cumulative No. of No. of No. of No. of No. of Investment Ranka Economy projectsb Value projectsb Value projectsb Value projectsb Value projectsb Value
Total 220 590.6 243 551.0 232 707.5 350 982.7 6,960 9,340.0
1 Hong Kong, China 24 24.5 15 17.5 26 200.7 40 355.6 2,025 4,074.3 2 United States 21 81.1 15 23.1 19 53.7 41 151.5 703 834.5
3 Canada 1 0.1 8 31.7 4 3.5 4 1.2 144 436.0 4 Australia 3 1.7 13 10.2 6 10.1 15 48.6 215 431.0
5 Thailand 3 2.0 6 3.3 9 121.3 5 3.9 234 214.7
6 Russian Federation 12 3.8 14 13.9 12 12.4 27 35.5 482 206.6 7 Peru 1 75.7 1 0.0 2 3.1 — — 20 201.2
8 Macao, China 3 0.2 4 0.5 6 2.4 2 2.0 229 183.7
9 Mexico 2 97.0 1 19.8 1 0.2 1 2.0 45 167.4 10 Zambia 4 6.7 3 11.6 3 4.3 1 0.3 18 134.4
11 Cambodia 13 32.8 7 17.2 7 34.9 3 5.1 61 125.0 12 Brazil 1 0.5 3 21.1 4 31.8 8 9.3 67 119.7
13 South Africa 14 12.8 17 31.5 2 12.4 3 1.7 98 119.3
14 Republic of Korea 1 0.1 5 4.2 2 0.8 7 83.4 62 107.8 15 Viet Nam 2 6.6 17 17.6 12 26.8 20 27.2 73 85.0
16 Japan 1 0.5 2 0.3 6 1.7 11 18.2 236 82.1 17 Singapore 6 2.9 6 1.0 3 0.4 6 2.1 172 71.7
18 Myanmar 1 6.6 7 32.9 3 1.8 5 15.8 38 66.1
19 Indonesia 0 18.9 1 8.0 2 0.6 6 3.7 59 65.0 20 Mail 1 1.2 1 28.7 — — — — 5 58.1
21 Mongolia 15 40.3 12 5.4 7 4.5 7 3.4 69 56.6 22 Germany 1 0.3 1 1.6 3 3.5 6 2.8 150 51.5
23 New Zealand — — — — 2 0.9 2 0.9 26 48.7
24 Egypt 5 3.8 3 9.7 2 1.4 3 16.3 27 48.5 25 Oman — — — — — — 1 17.5 70 47.2
26 Papua New Guinea — — 1 0.9 — — — — 20 44.7 27 Nigeria 2 1.6 1 2.6 8 6.4 9 11.4 49 44.3
28 Tanzania, United Rep. of 3 16.3 1 1.0 — — 2 0.4 19 41.3
29 Kazakhstan 7 17.2 5 7.7 1 0.3 3 26.9 51 39.6 30 Lao PDR 1 2.0 2 24.4 1 1.2 2 61 18 36.6
Source: China, Ministry of Commerce, various years as quoted in World Investment Report 2004, The Shift Towards Services, p. 298. a - Ranked by cumulative investment value. b - The number of projects refers to approved investment projects involving Chinese enterprises.
– 41 – ANNEX E: NOTES
Executive Summary should still go through the process of examination and 1 Established in May 1952, CCPIT comprises VIPS, enterprises approval by the NDRC. With the written approval by the and organizations representing all economic and trade NDRC, investors can proceed to matters in relation to sectors in China. It is the most important and the largest foreign exchange, customs and excise and taxation, etc. institution for the promotion of foreign trade in China. C. Central State-owned enterprises with offshore investment CCPIT has 49 local branch offices, 18 industrial branch of less than US$30 million (resource exploration projects), or offices, more than 600 sub-level branch offices and county- projects involving foreign exchange of less than US$10 level chambers of commerce, and more than 60,000 million, do not need the approval of the NDRC, but should member enterprises, covering all parts of China and all register with the NDRC. The NDRC should issue a trades and industries in the country. CCPIT operates 15 certificate of registration within seven days. Next, these representative offices in Hong Kong, the US, Canada, central SOES should submit their applications to Britain, Germany, Australia, Italy, South Korea, Japan, MOFCOM. MOFCOM should seek advice from the Belgium, France, Mexico, Russia, the Dominican Republic Economic and Commercial section of Chinese embassies or and the United Arab Emirates. consulates and make a final decision within 15 days. With 2 The questionnaire was designed both in English and Chinese, the Certificate of Approval, investors can proceed to matters and the Chinese version was used for the survey. Prior to the in relation to foreign exchange, bank loans, customs and formal survey, a pre-test of the questionnaire was conducted relevant foreign affairs. in 10 Chinese companies to obtain the feasibility of the D. Other enterprises with offshore investment of less than survey questions. The survey website was developed and US$30 million, or projects involving foreign exchange of less maintained by InSite Survey System, Ltd.. Both the logon than US$10 million, should be examined and approved by page of survey website and the English questionnaire are the local branches of the NRDC. The local branches of the attached in Annex A and B. NRDC should make decisions within 20 days, and report these decisions to the NRDC. With the approval of the Introduction NRDC, the enterprises should next submit their applications 1 Other studies, such as Wu and Chen (2001), and Wong and to local departments of commerce. The latter then should Chan (2003), cited in Frost (2004),divide these policy seek advice from the Economic and Commercial section of changes into four stages. Chinese embassies or consulates and make a final decision 2 “Processing trade” is the official translation for jiagong within 15 days. With the Certificate of Approval, investors maoyi, meaning overseas manufacturing projects that could can proceed to matters in relation to foreign exchange, bank process Chinese raw materials or assemble Chinese-made loans, customs and excise and relevant foreign affairs. parts that could eventually spur China’s exports. E. Enterprises intending to invest in Hong Kong, Macao, 3 Stated in the Notice of the National Development and Taiwan, sensitive areas, or countries without diplomatic ties Reform Commission, the Export-Import Bank of China on with the PRC, should consult with relevant departments, Giving Credit Support to the Key Overseas Investment which should submit a written suggestion to the NRDC Projects Encouraged by the State. within seven days. With the approval of the NDRC, 4 Overseas projects can be classified into five types that must investors can proceed to matters in relation to foreign undergo different procedures. exchange, customs and excise and taxation, etc. A. The NDRC should examine offshore projects with 5 Sources: Interim Measures for the Administration of investments above US$200 million, or projects involving Examination and Approval of the Overseas Investment foreign exchange of above US$50 million, then report its Projects, issued by the NRDC on October 9, 2004, Provisions suggestions to the State Council, which is the final authority on the Examination and Approval of Investment to Run to approve the project. Enterprises Abroad issued by MOFCOM on October 1, 2004. B. The NDRC should examine and approve offshore resource According to these directives, enterprises intending to invest exploration projects with investments over US$30 million, or in Hong Kong, Macao, Taiwan, sensitive areas, or countries projects involving foreign exchange of over US$10 million. without diplomatic ties with the PRC, should consult with The NDRC should process the application within 20 days. relevant departments, which should submit a written As for overseas bidding or acquisition projects, enterprises suggestion to the NRDC within seven days. The NRDC should submit a written report to the NDRC prior to the bid should make the final decision. or acquisition, and the NDRC should process it within seven 6 These “pilot” areas encompass: Beijing, Chongqing, days. If the bid or acquisition is successful, the enterprises Shanghai, Tianjin, and in 10 provinces (Fujian, Guangdong,
– 42 – Guangxi, Hainan, Heilongjiang, Hubei, Jiangsu, Shandong, Sichuan, and Zhejiang). 7 For Canada, Guidelines (No.1) highlight 10 sectors, including forestry and logging, oil and gas extraction, clothing manufacturing, wholesale and retail trade, paper manufacturing, chemical manufacturing, craft product manufacturing, and dairy product manufacturing. 8 According to Circular of the General Office of the Ministry of Commerce on Setting up An Information Bank of Overseas Investment Intention of Enterprises, issued on November 28, 2003. 9
China’s Outward Direct Investment Performance 1 In October 2004, the China’s Ministry of Commerce and the National Bureau of Statistics jointly issued China Outbound Investment Statistics Report 2003, the first report of this kind unveiling data on Chinese companies’ global investment performances. In September, 2005, MOFCOM and NBS jointly issued China Outbound Investment Statistics Report 2004, which provides more detail information on the subject. 2 Annex C includes a list of the top 30 Chinese transnational corperations (TNCs) and the top 20 Chinese private companies investing overseas. The annex also includes profiles of selected Chinese companies’ overseas operations.
Results of the Survey 1 Publicly owned companies include limited liability companies, shareholding companies, and collective companies.
Conclusion 1 This figure represents the total investment approved, though not necessarily completed, during the period. It also takes no account of capital withdrawn, whether because of sale or closure of projects, so is not a measure of cumulative stock.
– 43 – ANNEX F: REFERENCES
Asia Pacific Foundation of Canada. “Bid for CP Ships Again Centre for Financial and Management Studies, SOAS, Raises the Issue of Chinese State Ownership.” Asia Pacific University of London, January, 2004. Bulletin. No.220, August 5, 2005. 30 September 2005. http://www.asiapacificbusiness.ca/apbn/pdfs/bulletin220.pdf International Trade Canada and Industry Canada. Monthly Trade Bulletin. Vol. 6, No. 12, February, 2005. Asia Pacific Foundation of Canada. “China is Becoming a Global Investor. Can Canada Benefit?” Asia Pacific Bulletin. United Nations Conference on Trade and Development. No.175, September 10, 2004. 30 September 2005. (UNCTAD). World Investment Report 2004. The Shift http://www.asiapacificbusiness.ca/apbn/pdfs/bulletin175.pdf Towards Services. New York and Geneva, July, 2004.
Canada. Statistics Canada. “Canada’s Trade and Investment Wang Mark Yaolin. “The Motivations Behind China’s with China,” Canadian Economic Observer, Catalogue No. 11- Government-Initiated Industrial Investments Overseas.” Pacific 010, June, 2005. Affairs, Vol. 75, No. 2, Summer 2002.
China. Ministry of Commerce and National Bureau of Wong, J. and S. Chan. “China’s Outward Direct Investment: Statistics. China Outbound Investment Statistics Report Expanding Worldwide.” China: An International Journal, 2003, October, 2004. 1(2): pp. 273-301, September 2003.
China. Ministry of Commerce and National Bureau of Statistics. Wu, Hsiu-Liang and Chien-Hsun Chen. “An Assessment of China Outbound Investment Statistics Report Outward Foreign Direct Investment from China’s Transitional 2004, September, 2005. Economy.” Europe-Asia Studies, 53(8): 1235-1254. 2001
China. National Bureau of Statistics. China Statistical Yearbook 2004, 2005. 30 September 2005. http://www.stats.gov.cn/english/statisticaldata/yearlydata/ yb2004-e/indexeh.htm
China Academy of International Trade and Economic Cooperation (CAITEC) of the Ministry of Commerce and The Welsh Development Agency (WDA). Chinese Enterprises’ Expansion into European & North American Markets, February, 2005.
The Conference Board of Canada. Open for Business? Canada’s Foreign Direct Investment Challenge. June, 2004.
The Conference Board of Canada. Should Canada Update its Foreign Investment Rules? The China Minmetals – Noranda Case. November, 2004.
Frost, Stephen. “Chinese Outward Direct Investment in Southeast Asia: How Much and What Are the Regional Implications?” Working Papers Series, No. 67, Southeast Asia Research Centre, City University of Hong Kong, July, 2004.
Hong, E. and Laixiang Sun. “Go Overseas via Direct Investment: Internationalization Strategy of Chinese Corporations in a Comparative Prism.” Discussion Paper 40,
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The Author
Kenny Zhang is a Research Analyst at Asia Pacific Foundation of Canada specializing in China’s economic development. He received his BA and MA degrees in economics from Fudan University, China, and the Institute of Social Studies, The Netherlands, respectively. His main research interests focus on Canada-China trade and investment relations, labour migration in China and employment of immigrants in the Netherlands and Canada. Kenny Zhang previously worked as associate research professor at the Shanghai Academy of Social Sciences, and senior researcher at the Centre of Excellence on Immigration Studies at Simon Fraser University. Since May 2005, he has been a member of the Mayor of Vancouver’s Working Group on Immigration.
Acknowledgements
RESEARCH TEAM Yuen Pau Woo, Project Co-Leader, Asia Pacific Foundation of Canada
Lin Wang, Project Co-Leader, Economic Information Department of The China Council for the Promotion of International Trade
Kenny Zhang, Project Coordinator, Asia Pacific Foundation of Canada
Janet Fang, Asia Pacific Foundation of Canada
Yongping Cao, Economic Information Department of The China Council for the Promotion of International Trade
Ming Liu, Economic Information Department of The China Council for the Promotion of International Trade 360114cov 11/21/05 6:20 PM Page 4
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