België moet meer Chinese investeringen binnenhalen

Jeroen Langerock Perschef

Brussel, 2 juni 2006

PERSBERICHT

België moet meer Chinese investeringen binnenhalen De Chinese economie is in bijzonder goede doen. Steeds meer Chinese ondernemingen kijken voor hun expansie verder dan de Chinese Republiek. Europa en België in het bijzonder moeten hiervan mee de vruchten kunnen plukken. “Op vraag van minister van Buitenlandse Zaken De Gucht liet het VBO een verkennende studie uitvoeren om de directe buitenlandse investeringen van China in kaart te brengen en na te gaan hoe ons land er optimaal voordeel kan uithalen. De resultaten geven aan dat België wat betreft het aantrekken van Chinese investeringen niet goed scoort, maar dat we de zaken kunnen keren als we snel een reeks gerichte maatregelen nemen”, zo geeft Rudi Thomaes, gedelegeerd bestuurder van het VBO, aan.

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Feiten en cijfers op een rij “China as a global investor: Can Belgium benefit?”, zo luidt de titel van de studie uitgevoerd door de professoren Daniël Van Den Bulcke en Haiyan Zhang van het Euro-China Centrum aan de Universiteit Antwerpen Management School (UAMS) in opdracht van het VBO. Het volume aan directe buitenlandse investeringen (DBI’s) van China groeit fors (sinds 2002 een jaarlijkse groei van gemiddeld 36% tot bijna 52 miljard dollar eind 2005), maar het aandeel ervan in het totale wereldvolume aan DBI’s blijft toch nog zeer beperkt (zowat 0,5%). Bovendien zijn die Chinese investeringen vooral gericht op Azië en veel minder op Europa. De laatste jaren gaat het grootste deel naar de ontginning van natuurlijke grondstoffen (vooral olie- en gaswinning) alsook naar de productie en verwerking van industriële producten. Er is ook een stijgend aandeel van industriële O&Oinvesteringen. Olie, ICT, telecom en industriële productie zijn samen goed voor 90% van de Chinese DBI’s in 2005. Daar komt bij dat deze investeringen geconcentreerd zitten bij een beperkt aantal grote ondernemingen die dan nog overwegend in handen zijn van de Chinese overheid. China zet zijn opmars verder Men verwacht dat China mettertijd gaat behoren tot de vijf grootste buitenlandse investeerders op wereldvlak. Qua bestemming buiten Azië blijven de grote ondernemingen de voorkeur geven aan Noord-Amerika boven Europa. De

De persberichten zijn beschikbaar op de VBO-site: www.vbo.be. U kan ze systematisch verkrijgen via e-mail door u te abonneren via de rubriek “pers” van de site.

> Vervolg 1 van het persbericht van 2 juni 2006

hoofdredenen voor de Chinese bedrijven om in het buitenland te investeren zijn het aanboren van nieuwe groeimarkten en het toegang krijgen tot informatie en technologie in het buitenland. De Chinese investeringen gebeuren bij voorkeur door het nemen van meerderheidsbelangen en volledige eigendom en steeds meer ook via fusies en overnames (vooral in de ontginning en productie). België scoort slecht… België scoort echter niet goed wat betreft het aantrekken van Chinese DBI’s.Terwijl ons land in 2004 slechts één goedgekeurd investeringsproject voor een relatief beperkt bedrag kon optekenen, slaagde Nederland erin 5 projecten met een veel hogere totaalwaarde aan te trekken. Die slechte prestatie steekt schril af tegen Belgiës traditioneel hoge score qua DBI per hoofd van de bevolking. “De Chinese autoriteiten en handelsvertegenwoordigers hebben een gemengd, maar eerder negatief beeld van België. Hoewel onze traditionele troeven zoals een goede infrastructuur, hooggekwalificeerd personeel, centrale ligging erkend worden, staat België niet expliciet vermeld in de Chinese promotiegids voor DBI’s, terwijl dat voor enkele andere Europese landen wel het geval is. Een veel gehoorde kritiek van de bevraagde Chinese vertegenwoordigers is de ingewikkelde administratieve en institutionele structuur van België. Die maakt dat we te weinig kunnen uitpakken met een country identity in het buitenland. Chinezen missen ook één aanspreekpunt voor bilaterale handelsbetrekkingen, handelspromotie en investeringsprojecten. Een ander pijnpunt zijn de complexe en lange procedures voor het bekomen van werkvergunningen en visa. Er zijn zelfs gevallen van misgelopen of stopgezette investeringsprojecten omwille van dergelijke administratieve complicaties en vertragingen”, zo vertaalt professor Van Den Bulcke de reacties van de geënquêteerde Chinese zakenlui en vertegenwoordigers. … en kan/moet beter doen “Deze bevindingen maken duidelijk dat de federale overheid, in nauwe samenwerking met de gewesten, dringend werk moet maken van een gecoördineerd beleid gericht op het aantrekken van Chinese investeerders. Onze troeven moeten daarbij nog meer in de kijker worden gezet. De Belgische markt is bovendien zeer geschikt voor het uittesten van marketingstrategieën en nieuwe producten. We beschikken trouwens over een sterk uitgebouwde industrie – met onder meer de automobiel- en chemische nijverheid – met heel wat O&O-centra in hoogtechnologische clusters (bijvoorbeeld de ruimtevaart- en biotechnologie). België moet het vooral hebben van Chinese investeringen in distributiecentra van grote productiebedrijven, maritiem transport en logistiek, onderzoekscentra in kennisgedreven sectoren en het oprichten van verkoopkantoren door Chinese exportgerichte KMO’s”, zo besluit Rudi Thomaes.

De persberichten zijn beschikbaar op de VBO-site: www.vbo.be. U kan ze systematisch verkrijgen via e-mail door u te abonneren via de rubriek “pers” van de site.

China as a global investor: Can Belgium benefit? Danny Van Den Bulcke and Haiyan Zhang

Euro-China Centre University of Antwerp Management School-UAMS Rudi Thomaes

Federation of Enterprises in Belgium 0

The study Danny Van Den Bulcke and Haiyan Zhang

Euro-China Centre University of Antwerp Management School-UAMS

1

1

Importance of China’s outward FDI ¾ Strong increase ¾ But, still small share in the world total and as compared to developed countries

2

China’s outward FDI flows (US$ billion), 1980s-2005 8.00 6.92

7.00

6.00

5.50

5.00 Introduction of new statistical method 4.00

3.00

2.00

2.70

2.86

Average annual flows

1.00 0.16

0.23

1980s

1990s

0.55

0.62

2000

2001

0.00 2002

2003

2004

2005

Source: MOFCOM 3

3

China’s outward FDI stock (US$ billion), 1990-2005 60.00 Average annual growth = 36% 51.72 50.00 44.80 40.00 33.20 30.00

27.60

20.00

29.92

15.80

10.00 2.50 0.00 1990

1995

2000

2002

2003

2004

2005

Source: MOFCOM 4

4

China’s outward FDI as percentage of the world total, 2003-2004 0.90

2003

2004 0.55

0.48

0.45

Flows

Stock

Source: MOFCOM and UNCTAD 5

5

Location, sector patterns and projection ¾ Increased importance of investments in natural resources ¾ Mainly oriented towards Asia, only small share is going to Europe ¾ Rapid growth as potential source of outward FDI 6

Sector distribution of China’s outward FDI, 2004 Other Agriculture

5.0% 5.3%

10.3% 1.9%

13.6% Business services

36.7%

13.8% 14.5%

Manufacturing

10.0%

Wholesale & retails

17.5%

Transport. & Warehouse

10.2%

Mining

Mainly in communicatiosn, PC and other electronics, Textile, food and pharmaceuticals Mainly in foreign trade

15.1%

Mainly in maritime transportation

32.7%

Mainly in oil and gas

13.3% Flows, 2004

Stock, 2004

Source: MOFCOM 7

7

Destination of China’s outward FDI (stock & flows), 2004 North America 2.4%

Oceania 1.1%

Oceania 2.2%

Europe 1.7%

North America 2.3% Europe 3.1%

Africa 2% Africa 5.8%

Sudan, Niger

Latin America 18.5%

Latin America 32%

Cayman Islands Virgin Islands (Offshore operations)

Hong Kong (87.7%) Indonesia Singapore South Korea Asia 54.6%

Asia 74.6%

Source: MOFCOM

Flows, 2004

Stock, 2004

8

8

Geographical priority of top 50 Chinese MNEs (1) CIS

Europe

Growing interest

Less attractive than North America

Japan/Korea Limited interest

North America Priority target region

Hong Kong/Macau Diminishing interest

Southeast Asia

Level steady interest

South Asia

Developing new continent

South America

Australia/New Zealand

Stable appeal

Diminishing interest

Source: Roland Berger, 2005 9

9

Expected sources of origin of FDI (% of responses by

Investment Promotion Agencies - IPAs), 2004-2007

US Germany UK France China Japan Netherlands South Africa Spain Italy Canada 0.00

10.00

20.00

30.00

40.00

50.00

60.00

Source: UNCTAD, 2005 10

10

Projection of Chinese annual outflows of FDI* 60

50

40

Outflows OutflowsofofFDI FDIby bymajor majorhome home countries in 2004 (US$ billion): countries in 2004 (US$ billion): US US229, 229,UK UK65, 65,Luxembourg Luxembourg59, 59, Spain 54, France 47, Canada 47, Spain 54, France 47, Canada 47, Hong HongKong Kong39, 39,Japan Japan30, 30, Switzerland 25, Belgium Switzerland 25, Belgium20 20

Stock: US$ 177 billion Annual flow US$50 bil.

30

Stock: US$ 65 billion

20

Annual flow US$20 bil.

10

0 2002

2003

2004

2005

2006

2007

2008

2009

2010

2011

2012

2013

2014

2015

*Note: Estimated annual growth at 22%, MOFCOM 11

11

Investment motives, location factors and entry modes ¾ Looking for new markets and technology and know how ¾ Requesting legal help and political support ¾ Preferring wholly owned and majority subsidiaries 12

Primary motivations for Chinese companies considering global expansion, 2006

Source: IBM and Fudan, 2006 13

13

Location factors for Chinese companies in Germany Support during establishment 4.2

Legal help/political support

4.0

Finding partners

3.9

Administrative supports 3.5

Identification of investment projects Support during integration stage

4.0

German language courses

3.9

Contact with neighbours 3.6

Local organisation 2.8

Removal support Support of private activities

3.2

Chinese food Established Chinese community

3.0

Chinese cultural organisations

3.0 2.7

Chinese schools

2.6

Chinese clubs 0.0

1.0

2.0

Source: Bain, 2005 14

3.0

4.0

5.0

14

Modes of entry of Chinese firms (1999) Majority owned JVs 56%

Minority JVs 12%

Equally owned JVs (50: 3%

Wholly owned companies 29%

15

China’s FDI in Belgium ¾ Low and declining ¾ Weak as compared to other EU countries ¾ Weak as compared to its global inward FDI position

16

China’s FDI stock in Europe (US$ million), 2004 129.21

Germany

127.67

Spain 108.46

UK 67.00

Denmark 21.68

France

20.84

Italy 8.97

Netherlands

6.44

Sweden Switzerland

1.86

Belgium

1.64

Other Western Europe 1.66 0.00

20.00

40.00

60.00

80.00

100.00

120.00

140.00

160.00

Source: MOFCOM 17

17

Relative importance of China’s direct investment in different European countries (2004) D e nmark 12,45 S pain UK G e rmany S we de n N e the rlands

18,19 3,01

8,19 1,82

12,93

1,57

4,22

0,72

18,16

0,55

F ranc e

0,36

I taly

0,36

Belgium

26,37 8,89 3,81

0,16

P ortugal

0,02

I re land

0,01

24,90 6,23 56,92

China's FDI st ock per capit a (US$)

Global FDI st ock per capit a ('000 US$)

18

18

Chinese subsidiary companies/branches in Belgium • About 30 Chinese companies during the 1990s - Mostly trading companies: chemicals, metals, foods, etc; - China-Europe Distribution Centre established in 1978 in Antwerp attracted about 10 Chinese trading companies in the 1980s and 1990s - Yet, most of those companies later moved to Germany (i.e. Hamburg) and the Netherlands or closed at the end of 1990s

• Only 12 are registered in 2005 as members of the Association of Chinese Companies in Belgium - Small size (most of them have no local management or staff) - Mainly located in Antwerp and Brussels

19

19

Location of Chinese owned companies in Belgium (2005) COSCO China Shipping Shantai Tianjin International Corp Beijing Gongmei Europe

Torin Jacks

Mechelen

BBCA MEG (Canada) AMOI/SPB

CNOOC China Coal HWL Hisense Great Wall Library

Drakkar Holdings

Adisseo Group (France)

20

20

Evaluation of Belgian investment environment for Chinese investors ¾ Mixed, ¾ But rather unfavorable view

21

Data sources • Questionnaire survey and interviews Interviews of top managers of 6 companies (half of the member companies of the Association of Chinese companies in Belgium) • Accounting for half of total employment by Chinese companies in Belgium • Operating in Belgium for about 9 years on average

• Meeting with four journalists and two diplomats/trade representatives (14/10/2005) • Qualitative comments 22

22

Specific location advantages of Belgium (Country profile, MOFCOM, 2002) • Good infrastructure - Transportation networks - Logistics

• Skilled labour - High productivity - Good language skills

• Central position - Geographical location - Brussels: Seat of European Commission

• Favourable FDI policy - Transparency, stability and non-discrimination

23

23

Complicated administrative/institutional system

(views of Chinese managers, trade representatives and journalists)

• Lack of unique “image” and “voice” abroad • - Lack of country identity of Belgium • - More competition than cooperation between regions • No established contact point (e.g. interactive China desk) • - Is there an expert support system with regard to policy making (expert committee)? • -Is there an administrative support system for decision making and coordination (e.g. China desk or department)

24

24

Need for one-stop service (1) (views of Chinese managers, trade representatives and journalists) • Promotion by the regions. Yet, no single voice for “Belgium” - Trade/investment promotion agency

• Business registration - Local trade register/TVA (easy procedure)

• Work permit (complicated and long procedures)-Most serious handicaps - Professional card (FPS Economics/FPS Interior Affairs: Foreigner Office) long procedures - Employment of foreign experts (Regional government) high administrative barriers and complicated procedures - Extension of professional cards: sometimes depending on the business results (which are not always positive at the beginning stages of the investment) 25

25

Need for one-stop service (2) (views of Chinese managers, trade representatives and journalists) • Visa and residence permit - Visa (FPS Foreign Affairs/FPS Interior): depending on the city (Shanghai easier than Beijing) - Extension of residence card (FPS Interior Affairs): depending on the local administration

26

26

Unfavourable immigration policy • Every interviewed manager and journalists (even diplomats) had rather negative personal experiences with the application for work permit and visa - Complicated/long procedures and no transparency - High costs (lawyer)

• Difficulties in obtaining/extending work permits may be at the origin of - Closure of Chinese firms - Delocation to other countries: e.g. Beijing Drawn-work, Tianjin Distribution Centre, Henan Yueyang, Shanghai Electricity, etc

• Business activities are frequently interrupted because of repeated visa problems - Not receiving the visa and resident permit on time makes travelling abroad for business contacts impossible during the waiting period 27

27

Summary(1) • China’s outward direct investment is still small at the world level, but is growing fast and is expected to expand further • Most Chinese outbound investors are market seekers or are looking for technology, skills and brands and increasingly for natural resources • Europe does not rank as a priority region for the larger Chinese firms • Within the EU, Belgium does not score very high both in absolute and relative terms

28

28

Summary (2) • Chinese businessmen and other representatives are rather critical of Belgium’s attitude and policy towards Chinese investors • While efforts are being made to improve the Belgian investment climate, more attention might be given to Chinese and other investors from emerging economies • From the point of view of a Belgian company it is necessary to evaluate the investment patterns abroad of their Chinese and other competitors from emerging economies very closely

29

29

Conclusions Rudi Thomaes

Federation of Enterprises in Belgium

Conclusions of the study 1. 2. 3.

4.

Need to promote Belgium and its regions better Need to focus promotion efforts Need to analyse and improve application procedures for visas and residence and work permits Need to create an efficient contact point for a foreign investor

1. Need to promote Belgium and its regions better O

Create a unique image and voice abroad while respecting the division of powers in Belgium: O

O

Website in Chinese with useful links for potential Chinese investors Include Belgium in China’s official document “List of promoted countries and sectors for China’s outward FDI”

Conclusions of the study 1. 2. 3.

4.

Need to promote Belgium and its regions better Need to focus promotion efforts Need to analyse and improve application procedures for visas and residence and work permits Need to create an efficient contact point for a foreign investor

2. Need to focus promotion efforts Promote Belgium and its regions: O As what? O Which Chinese companies should be targeted? O O O

Which types of company? Which sectors? Which regions in China?

Promoting/marketing Belgium as a O

Logistics hub for supplying and distributing products across Europe O O

O

Central geographical location State-of-the art transportation infrastructure

European platform for intra-firm organisation and management O O O O

Representative offices Holdings European headquarters Information centre (e.g. close to EU institutions)

O

Gateway to and platform for pan-European business O

O

Belgium has a small market, but its multicultural society is ideal for market/product testing

World class industrial clusters O

O

Supplying raw materials and components, e.g. automotive industry, chemical industry R&D centres in knowledge-based clusters, e.g. IMEC, Walloon Space Cluster, Flanders Interuniversity Institute for Biotechnology, etc

Which Chinese companies should be targeted? O

Large, leading manufacturing companies: O O O

O

Distribution centres After-sales services call-centres Regional European headquarters

Maritime transportation and logistics: O O

Shipping Logistics

O

Knowledge-intensive companies O

O

R&D centres (in Belgian industrial clusters)

Small and medium-sized companies with high export performance and large share in global niche markets O O

Assembly and manufacturing activities Sales and RP office

Which Chinese regions and sectors should be targeted? Business and corporate services: e.g. regional headquarters, RP offices, etc. % in total Chinese OFDI in 2004

Knowledge based industries: e.g. microelectronics, biotechnology and pharmaceuticals Export oriented industries: e.g. automotive part, consumer electronics, tools, machinery, etc.

Conclusions of the study 1. 2. 3.

4.

Need to promote Belgium and its regions better Need to focus promotion efforts Need to analyse and improve application procedures for visas and residence and work permits Need to create an efficient contact point for a foreign investor

3. Need to analyse application procedures for visa and residence and work permits Application procedures for visas and residence and work permits need to be analysed O Target: Reduce lead time and administrative burden as much as possible O

Conclusions of the study 1. 2. 3.

4.

Need to promote Belgium and its regions better Need to focus promotion efforts Need to analyse and improve application procedures for visas and residence and work permits Need to create an efficient contact point for a foreign investor

4. Need to create an efficient contact point for a foreign investor

Tasks: Attract and follow-up of foreign investment O Should be: O

O O O

Creative and flexible One-stop shop Able to solve problems