ODI curb will improve China deals
May 21, 2012 Category Foreign investment, Weekly
The central government’s plan to slow the growth of overseas direct investment (ODI) will lead to more successful and quality investments, said speakers at the American Chamber of Commerce in Hong Kong’s 2012 China Conference. For the 12th Five Year Plan period from 2011 to 2015, the Ministry of Commerce (MOFCOM) has set a target of 17% annual growth of overseas direct investment (ODI) to USD150 billion by 2015. The target rate has been set lower than the 30% in the previous Five Year Plan period of 2006 to 2010. Chinese investments have been made in nearly 200 countries. “If you have a fast rate of growth, you have lots of bad deals. Slower growth rate can give you better quality. I like this cautious approach,” said Zheng Lili, co-leader of Asia Pacific International Core of Excellence of Deloitte. With a slower growth rate in outbound investment, the rate of success of Chinese companies’ overseas acquisitions will go up and the rate of failure will go down, said Stanley Jia Tianan, Partner at international law firm Baker & McKenzie.
- “Chongqing will definitely further open up and be more active in terms of its economic development,” Vice Premier and Chongqing Party Secretary Zhang Dejiang told entrepreneurs attending the 2012 Annual Conference of CEC/CEDA and Liangjiang Forum in Chongqing. Before the forum, Mika Vehvilainen, President and CEO of Finnair; David Hsu, Director of Jardine Matheson; and Dr Annie Wu, Chairwoman of Beijing Air Catering, were among those attending a rare high-profile meeting with Zhang.
- China’s outbound non-financial foreign direct investment (FDI) climbed 72.8% to USD23.1 billion in the first four months, up dramatically from last year’s growth of 1.8%. Xu Sitao, Global Forecasting Director for China at the Economist Intelligence Unit (EIU), said the world was set to see more investment from China from both state- owned
and private companies.
- The number of foreign SMEs opening offices in Hong Kong is at a record high this year, according to Simon Galpin, Director General of InvestHK, a government-funded organization that provides free services to help overseas firms set up and expand in the city. “Our offices in Brussels and London have already reached their target for this year,” he added. Last year, InvestHK helped 303 companies to set up offices in Hong Kong.
- FDI in Shanghai continued to expand in April, in contrast to the national trend of falling investment from overseas. Shanghai attracted USD2.07 billion of contracted foreign investment last month, up 33.2% from a year earlier, the Shanghai Statistics Bureau said. The pace quickened from the 2.7% rise in March and compared with February’s 29.3%. Actually used foreign investment increased 15.9% to USD1.39 billion last month, slower than the surge of 46% in March. Shanghai aims to attract at least USD10 billion in foreign direct investment each year till 2015.
- Hong Kong businesses have invested USD910 million in Hebei province in the first four months of the year, up nearly 30% year on year. Hong Kong accounted for more than three-quarters of all foreign investment in the province.
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