China’s non-financial outbound direct investment (ODI) surged 24.1% year-on-year in the first quarter of
this year, as stringent controls have reined in domestic companies’ irrational buying spree, the Ministry of Commerce (MOFCOM) said. Chinese investors made USD25.5 billion of non-financial ODI in 2,023 foreign enterprises across 140 economies in this year’s first quarter. “The structure of ODI has been optimized, as stringent controls have effectively reined in irrational outbound investment,” the Ministry said. Most investment flowed into sectors such as leasing, mining, manufacturing and information technology services. ODI in the leasing and business service sectors accounted for approximately one- fourth of the total.

In comparison, no new investments were made in the property, sports and entertainment sectors in the same period. China’s outbound direct investment, after peaking in 2016, saw a drastic reduction in 2017 amid the government’s efforts to curb irrational investment overseas that has brought potential risks to overall financial security. China’s ODI in economies participating in the Belt and Road Initiative climbed 22.4% year-on-year to USD3.61 billion in the first three months this year.

Foreign direct investment (FDI) into China registered steady growth, increasing 0.5% year-on-year to CNY227.54 billion in the first quarter this year. FDI in the high-tech sector accounted for nearly one-fifth of total FDI in the period.

The China International Import Expo, which will be held in Shanghai from November 5 to 10, has launched its one-stop online trading platform to give the six-day event an extended life online throughout the year. Companies participating in the CIIE will be able to display their products on the e-platform. They can seek potential partners, and complete online trading using digital payment systems. Donghao Lansheng, the expo’s operator, and the Council for the Promotion of International Trade (CCPIT) Shanghai, will be responsible for the design and management of the online platform. Some 30 companies have already created a presence on the e-platform. Thanks to the online platform, the CIIE will become “an exhibition that never ends”.

Cao Wei, Vice President of the expo operator, said the purpose of launching the online platform is to ensure
the success of all participants of the CIIE and create an ecosystem that connects the internet, the expo and trade services. “We would like to build the expo into one of the best examples of China’s opening-up policy,” he said. So far, nearly 2,000 companies have committed to attend the CIIE, the majority from overseas. “Foreign companies will have to fly a lot of stuff all the way from their home country to Shanghai for the expo. Given all the efforts they have to make, we would like to extend our services online so that these overseas companies can demonstrate their latest achievements on the platform and make the most of the expo,” she said. The expo organizer is also developing a mobile app to reach a global audience. Shanghai’s Party Secretary Li Qiang said at a meeting to mark the 200-day countdown to the expo that the CIIE is the first national-level exhibition focussed on imports, the China Daily reports.

According to the General Administration of Customs, China’s first-quarter imports were worth CNY3.21 trillion, up 11.7% year-on-year. The CCPIT said it will help about 100 countries and regions to promote up to 10,000 commodities in China, especially the imports of advanced technical equipment, key components and high-quality consumer goods. Meanwhile, the Council will organize delegations to go abroad to make collective purchases and hold meetings for entrepreneurs from both home and abroad.

Shanghai also announced the establishment of the Shanghai International Import Trading Services Co.

China has decided to impose provisional anti-dumping measures on sorghum imported from the United States, the Ministry of Commerce (MOFCOM) said in a preliminary anti-dumping ruling. It said that U.S. companies had dumped sorghum on the Chinese market, and such imports had caused substantial damage to the domestic industry. Starting on April 18, sorghum importers were required to pay deposits with Chinese customs of 178.6%. China is a major buyer of U.S. sorghum, which is used in the Chinese liquor baijiu. U.S. sorghum exports to China surged from 317,000 metric tons in 2013 to 4.76 million tons in 2017, while export prices have slumped 31% during the period, which led to a fall in domestic prices that hurt local industries. Twenty ships carrying over 1.2 million tons of U.S. sorghum valued at more than USD216 are on the way to China, according the U.S. Department of Agriculture. At least five ships changed course within hours of China’s announcing the tariff. They would be liable for a hefty deposit to be paid on the value of their shipments, which could make the loads unprofitable to deliver.

In addition to sorghum, China also started an anti-dumping investigation into imported phenol from the United States, the European Union, South Korea, Japan and Thailand late last month. Separately, China’s Ministry of Commerce announced a preliminary anti-dumping ruling on halogenated butyl rubber – used for making tires – originating from the U.S., the European Union and Singapore is being dumped into China. Importers representing such firms as ExxonMobil and Arlanxeo were told to pay import duty deposits ranging from 26% to 66.5% to China Customs. MOFCOM said that it had started an anti-trust inquiry into U.S. smartphone chip maker Qualcomm’s takeover of Dutch chip maker NXP Semiconductors on the basis that the deal could harm market competition. It said it would take “a large amount of time” to conduct the investigation.

“If China really does start slapping tariffs on everything, like soybeans and corn, things could get really ugly, really fast,” said Bill Densmore, Senior Director of Corporate Ratings at Fitch Ratings.

The U.S. Commerce Department announced it was starting new investigations to determine if certain steel wheels from China are dumped in the U.S. and whether manufacturers in China are receiving subsidies. The U.S. government also made a preliminary determination that aluminum sheet imports from China are being subsidized.

The U.S. has initiated five investigations on anti-dumping and countervailing measures against Chinese products so far this year. The number of cases has increased significantly year-on-year. Three of the five products involved are steel products.

Chinese smartphone maker Xiaomi is expected to launch the biggest initial public offering (IPO) of 2018 as Founder Lei Jun is pondering where to list his USD100 billion company, being wooed by stock exchange officials from New York to Hong Kong, Shanghai and Singapore. It would be the biggest IPO in 2018 and the largest global one in four years. It could also make 49-year old Lei Jun China’s wealthiest individual. He has built Xiaomi from a start-up into a company with 15,000 employees and CNY100 billion in sales in seven years, producing more than 70 products under the Mi brand, including smartphones, tablets, other electronic devices and household products. The company is even considering to manufacture cars in India, and nurturing 100 start-ups in the country in five years. The company’s valuation has more than doubled from its most recent 2014 fundraising when it was valued at USD45 billion, with Lei’s stake estimated at 77.8%.

“I started Xiaomi after turning 40, and had figured out 90% of the business model before starting the project,” Lei said. He founded Xiaomi in 2010 with seven engineers, including alumni of Google, Motorola and Kingsoft. Lei Jun is motivated by the belief that Chinese manufacturers can cast off the stigma as makers of cheap, low-quality bootleg products, although it started selling its smartphones through its website only at less than half the price of its competitors. But Xiaomi’s first smartphone, the Mi 1, featured Qualcomm’s top-of-the-line Snapdragon S3 Dual Core processor, with front and back cameras, and received more than 300,000 pre-orders in the first 34 hours when it went on sale in 2010.

“We created this business model that we call “tipping”, which is to sell our hardware at zero-or-low profit margin, but monetize our complementary services. I call it the triathlete of the New Economy, where Xiaomi makes hardware and devices, sells its products through e-commerce and offers services on the internet,” Lei said. Xiaomi, which means millet in Chinese, sells its products at cost, or with a profit margin of 1% or 2%. “We sell our smartphones at affordable prices, but if you use our browser, watch streaming video on our phones, or use our online services, we earn a profit,” he said. The strategy made Xiaomi the top smartphone brand in India with a 27% marketshare.

In its Chinese home market, Xiaomi lags behind Huawei, Oppo and Vivo in smartphone sales, but the company aims to retake the No 1 spot, as it was the fastest growing seller among China’s four home-grown smartphone makers in the fourth quarter of 2017, increasing shipments by almost 58% for a 13.9% marketshare, ahead of Apple. Lei Jun has now become the elder statesman of Chinese tech investments, with both Xiaomi and his venture fund Shunwei Capital investing in an estimated 450 companies in China and overseas, the South China Morning Post reports.

The Flanders-China Chamber of Commerce and KBC Bank are organizing a briefing on “China’s economic outlook and key issues for foreign investors after the 19th Party Congress”. This event will take place on Wednesday 16 May 2018 from 9:00-11:00 at KBC Bank, Kortrijksesteenweg 1100, 9051 Ghent.

During this briefing, two bankers from KBC Bank in China will discuss the following topics:

• Economic outlook & key issues for foreign investors
• Major developments after the 19th Party Congress
• Opportunities for Belgian companies: Greater Bay Area, Belt & Road

Programme
08:30 Registration and networking
09:00 Introduction by Gwenn Sonck, Executive Director, Flanders-China Chamber of Commerce
09:10 Presentation by P.C Leung, General Manager, KBC Bank N.V. Shanghai Branch and William Ip, Head of Corporate Banking, KBC N.V. Hong Kong Branch
10:00 Q & A discussion

Practical Information
Location: KBC Bank, Kortrijksesteenweg 1100, 9051 Ghent
Price for members: €66,55 (incl. 21% VAT)
Price for non-members: €90,75 (incl. 21% VAT)

If you are interested in participating in this event, please subscribe before 11 May 2018. GO TO THIS EVENT

Contact
FCCC: info@flanders-china.be

About the speakers

P.C Leung, General Manager, KBC Bank N.V. Shanghai Branch
After 10 years with Bank of China Group, P. C. joined KBC Bank Hong Kong Branch at 1991 as Financial Controller. He started his China banking career in KBC Bank Shanghai Branch in 1997. He also worked in KBC Bank Taiwan Branch for 3 years thereafter. He is now the General Manager of KBC Bank Shanghai Branch. P.C. earned a MBA degree and a Master of Information System degree. He is a Chartered Professional Accountant of Canada.

William Ip, Head of Corporate Banking
Joining KBC Bank NV Hong Kong Branch since 2006, William Ip is now the Head of Corporate Banking. He has been working in the commercial banking field with primary focuses on credit and relationship management over 25 years. Prior to KBC, William had worked for Bank of China Group, Fortis Bank and DBS. William earned his bachelor degree in Industrial Economics from University of Warwick and master degree in Financial Management from University of London.