China Direct

The Chosen Few: A fresh look at European FDI into China - Rhodium Group

After decades in which China felt like a one way bet for European firms, market conditions have become far more challenging due to restrictive COVID-19 policies, slowing economic growth and rising geopolitical tensions. Against this increasingly uncertain backdrop, we have taken a close look at European (EU+UK) FDI in China to assess the current state of investment on the ground, and shed light on how it has evolved over the past decade. Our key finding is that European investment has grown much more concentrated, both in terms of the companies that are investing there, the countries they come from, and the sectors in which they operate. While a handful of large firms, many of them German, continue to pour money into their China operations, many other firms with a presence in China are withholding new investment. At the same time, virtually no new European firms have chosen to enter the Chinese market in recent years. And acquisitions of Chinese firms have stalled, with greenfield investments increasingly dominating the FDI landscape.

Our findings point to a widening gap in how European firms perceive the balance of risks and opportunities in the Chinese market. They also suggest that a more nuanced perspective on the issue of European corporate dependencies is needed. From a direct investment point of view, it is wrong to talk about a broad-based dependence of European, or even German, companies on the Chinese market. As policymakers in Berlin and other European capitals consider measures to reduce economic dependence on China, they would be wise to take the growing concentration of corporate risks into account.

To read the full Rhodium Group research note please click here.

Our sincere thanks to the team at Rhodium Group for kindly sharing this information.

European Chamber Advocates for Beijing’s Return to Reform Agenda

 

Beijing, 21^st September 2022 – The European Union Chamber of Commerce in China today released its European Business in China Position Paper 2022/2023 (Position Paper), advocating for the Chinese Government to apply its proven toolbox of pragmatic reforms in the face of economic headwinds and rising geopolitical tensions.

While in the past Beijing’s reform agenda helped to ensure stability, propel economic growth and facilitate huge inflows of foreign direct investment, now ideology is trumping the economy.

In 2020, when China rebounded quickly from the pandemic relative to the rest of the world, the country came to be viewed as a safe haven for investment. However, adherence to an inflexible COVID-19 policy has led to unprecedented disruptions to business and exacerbated pre-existing challenges. Factors such as favouritism towards state-owned enterprises and increased politicisation of business have further eroded China’s standing as an investment destination. Companies are increasingly viewing the country as less predictable, reliable and efficient, and with geopolitical tensions on the rise, its future is less certain.

Inbound investment flows from Europe already indicate a changing trend. Over the past four years, the bulk of European FDI into China has been contributed by just a handful of large companies, while the rest have put their China operations in wait-and-see mode as they evaluate alternative markets that can provide greater certainty.

The European Chamber believes that comprehensive market reforms would be the most effective way for China to realise its economic potential and quickly rebuild investor confidence. However, for China to undertake necessary reforms, it is vital that political space be given to policymakers to ‘make mistakes’, discuss ideas and ultimately change course – something that was previously a characteristic of Chinese policymaking.

Despite the heightened difficulties facing European companies in China, they are committed to staying and improving the business environment, as illustrated by the 967 constructive recommendations put forward in the Position Paper 2022/2023. As the European Chamber’s most important publication and the cornerstone of its annual advocacy plan, the Position Paper was compiled by its 35 working groups and sub-working groups over a nine-month period.

“European companies are still eager to contribute to China’s economic development, but investment into the country is unlikely to increase while China keeps its doors closed and companies perceive political, economic and reputational risks to be mounting,” said Jörg Wuttke, president of the European Union Chamber of Commerce in China. “Companies are also crying out for transparency in the business environment, as they must now align their China operations with both corporate pledges and new supply-chain legislation in the EU and the United States.”

Download the report, please click here.

中国欧盟商会倡议中国政府重拾实干精神，回归改革道路

        2022年9月21日，北京——中国欧盟商会今日发布《欧盟企业在中国建议书2022/2023》（简称《建议书》），倡议中国政府为应对经济逆风和地缘政治紧张局势，重拾实干精神，回归改革道路。昔日，改革开放曾助力维护社会稳定，推动经济发展，吸引大量外商直接投资。如今，政治任务却优先于经济发展。

        2020年，当世界各国仍处于新冠疫情的水深火热中时，中国迅速恢复并成为安全的投资天堂。但是政府固守防疫政策严重影响商业发展，并加剧其他社会问题。对国有企业的支持、商业政治化日益加剧等问题逐步降低中国的投资吸引力。企业认为中国市场的可预测性、可靠性和效率逐步降低。随着地缘政治紧张局势加剧，未来发展难以预测。

        这从欧洲对华直接投资可见一斑。过去四年，欧洲对华主要直接投资仅来自少数大型企业。其余企业持观望态度，他们维持在华业务现状，积极考虑其它更为稳定的投资选择。

        中国欧盟商会坚信，全面实行市场改革是发挥中国经济潜力、迅速重建投资者信心的最有效措施。由此，为决策者提供政治空间“试错”、探讨想法并最终重归正轨至关重要。这种决策机制曾一度是中国政策制定的特色流程。

        尽管欧盟企业在中国面临巨大困难，但是仍愿与中国风雨同舟，共同改善商业环境。这在《建议书》中提到的967项建设性建议可见一斑。该《建议书》由35个工作组和子工作组历时九个月编撰而成，是中国欧盟商会最重要的刊物和年度工作计划的基石。

        中国欧盟商会主席伍德克表示：“欧洲企业仍愿为中国经济发展作贡献，但由于中国国门紧闭，欧洲企业难以预测日益复杂的政治、经济和声誉风险，暂无计划增加投资。同时，为将在华业务对标企业承诺以及欧盟和美国的新供应链立法，企业强烈呼吁商业环境透明化。”

点击这里下载报告全文。

Dates for Diaries: BYOND Mobile - Opportunities in Thailand's Telco Sector 28-29 Sept

 

 

The UK Department for International Trade will host a pavilion at BYOND MOBILE in Thailand on 28-29 September, and you are invited to be part of the exhibition.

The Asia Pacific region will account for 40% of the world’s connectivity within the next five years. Southeast Asia sits at the heart of this dynamic ecosystem, with an digital economy driven by over 400m internet users and projected to exceed $360bn by 2025. BYOND MOBILE is set to bring together more than 800 cutting-edge businesses, exhibitors, and tech thought-leaders on 28 – 29 September 2022 for Thailand’s first BYOND MOBILE exhibition. The B2B exhibition and conference – located at the Samyan Mitrtown Hall in the centre of Bangkok’s bustling business district - will this host community of change-makers for two days of business engagements and information exchanges on the next frontier of 5G technologies.

For more information please click here.

Our thanks to the DIT team in Thailand and the UKABC for kindly sharing this information.

China Dialogue - Environmental News Digest 20 Sept 2022

Dear CBI Members and Partners,

For reports, interviews and insights into a country shaping the world please review China Dialogue directly here.

Download News Digest China Dialogue 20-25 Sept 2022

With grateful thanks to the team at China Dialogue for so very kindly sharing this content.

Insight Indonesia - UK Business Opportunities and navigating the market

The British Chamber in Indonesia has prepared an excellent overview of the Indonesia market with extensive and detailed insights into this richly diverse, youthful and strategically important nation.

CBI member engagement in Indonesia is extensive with PZ Cussons, Rolls Royce, GSK, AstraZeneca, Unilever, Diageo, Marks & Spencer leading the way across a variety of sectors.

To access this comprehensive report please click on the link below.

Download Data on Indonesia Britcham Sept 2022

Our sincere thanks to Chris Wren, Executive Director, British Chamber Indonesia (chriswren@britcham.or.id www.britcham.or.id) for kindly sharing this invaluable report.

Quezon City transitions to clean construction

 

CBI Member Buro Happold and C40 Cities have launched the fourth report in a series of Clean Construction deep dives. These reports support cities in resourcing efficient, net zero construction to deliver healthy, resilient and thriving urban communities.

 

The engineering, architecture and construction industry has a huge role to play in bringing about positive social, economic and environmental change. Almost 40% of global energy-related greenhouse gas emissions are attributable to buildings and construction.

The built environment is therefore critical to addressing the climate and biodiversity emergency. We must unite as a sector to drive change. Failure to reduce the impact of construction in our cities poses a serious risk to the environment.

Clean Construction in our cities

 

As a result, C40 Cities launched its global Clean Construction Programme in 2019. The programme supports cities to mitigate the impact of construction, strengthen resilience to climate risks, and facilitate dialogue within the industry.

A series of deep dives into six cities around the world — developed in partnership with Buro Happold — take this one step further. The reports provide local, actionable advice to help city leaders make the case for Clean Construction. They also offer guidance for other cities around the world.  The deep dive for Quezon City, in the Philippines, is the fourth report in the series.

 

A green and equitable future for Quezon City

 

The Quezon City Government (QCG) has set ambitious climate action goals and is part of multiple national and international working groups focused on delivering bold climate action.

The QCG has developed a number of locally specific plans and commitments, such as the Enhanced Local Climate Change Action Plan 2021-2050, which sets out a strategic framework and roadmap to build climate resilience, pursue carbon neutrality, and advance green economic development through inclusive and equitable climate action.

 

“With strong expertise in the retrofit of buildings and an effective (albeit informal) construction waste recycling system, Quezon City is primed for a Clean Construction transition. Having an extensive ability to use a range of hard and soft powers, the Quezon City Government is uniquely placed to lead such a transition.”

Fergus Anderson, Sustainability Associate at Buro Happold

 

Transitioning to Clean Construction

 

The construction sector is a major employer in Quezon City, across both the formal and informal sectors. Quezon City is grappling with a number of challenges linked to a growing population, climate resilience, informality and wealth inequality, a limited focus on preventative maintenance and an emerging skills gap in the construction sector.

However, the city is also home to a culture of reuse and retrofit, and has developed ambitious local building codes – albeit with limited uptake – that consider embodied carbon. Quezon City, and the Philippines more broadly, has significant experience in retrofit and refurbishment of buildings due to the country’s seismic risks.

In recent years, municipal buildings such as the high rise Quezon City Hall have been retrofit to strengthen the foundation and make them more resistant to seismic activity, the Department of Public Works and Highways has upgraded hundreds of structures across Metro Manila to reduce damage from climate-related events, and the Philippines Heritage Awards annually celebrates adaptive reuse; recognising projects that utilise buildings and other built-structures for purposes other than what they were intended originally.

 

Download the detailed policy infographic

 

How can Clean Construction support Quezon City?

 

Implementing policies that reduce carbon emissions from both building and infrastructure construction can support many social and environmental co-benefits, not just locally but also on a global scale.

 

The localised benefits of Clean Construction include:

• Designing new buildings and streets to accommodate increased climate risks, as well as undertaking retrofit and refurbishment today, will ensure the safety of current and future inhabitants of Quezon City to flooding and overheating, and protect the valuation of assets following these events.
• Adaptive reuse can retain community identity and foster local pride, whilst minimising disruption to local communities.
• Green and biodiverse spaces have also been found to provide mental and physical health benefits, reduce local crime rates, and increase land and property values.
• New industries for low carbon construction materials and waste processing will create jobs locally, and support the stabilisation of the informal sector, providing workers with stable sources of income and low-income communities with safer homes. 

 

The global benefits of Clean Construction include:

• Encouraging sustainable production and consumption practices
• Increasing citizen awareness of environmental and health issues
• Mitigating greenhouse gases and emissions
• Driving economic innovation, dynamism and competitiveness
• Fostering inclusive, just and transparent governance

 

“Extending the lifespan of buildings and developing build-sustainable supply chains can improve the quality of housing and build healthier communities. Our recommendations to raise awareness and knowledge of clean construction techniques will help establish secure, safe and just working conditions.”

Fergus Anderson, Sustainability Associate at Buro Happold

 

 

A sustainable future for our cities

 

All these positive outcomes are inextricably linked. To address the need for greater social and environmental justice, cities have a critical role to play in spearheading the vision and leadership needed to facilitate this transition.

The proposed Clean Construction policies for Quezon City will be applicable, to varying degrees, to all cities around the world.

Buro Happold and C40 are working with five other cities around the world to make the case for Clean Construction. This work forms part of the C40 Clean Construction Declaration. These cities have committed to reducing the embodied emissions associated with the construction of buildings and infrastructure by 50% by 2030.

More information about Clean Construction can be found on the C40 Knowledge Hub.

To download the Report please click here.

Our thanks to Buro Happold for kindly sharing these invaluable insights.

 

China Dialogue - Environmental News Digest 29 Aug 2022

 

Dear CBI Members and Partners,

For reports, interviews and insights into a country shaping the world please review China Dialogue directly here.

Download News digest China Dialogue 29 Aug - 05 Sept 2022

With grateful thanks to the team at China Dialogue for so very kindly sharing this content.

Asian Development Bank - Virtual Business Opportunities Seminars for UK Plc.

 

Dear CBI Members and Partners,

Please find details of 2 UK Virtual Business Opportunities Seminars with the ADB (Asian Development Bank).

These events are in partnership with the UKABC (UK-Asean Business Council) and BEI (British Expertise International)

Registration and joining is free of charge, and we highly encourage UK firms interested in working with the ADB to join. Links are provided below.

14^th of September

8:15 to 10:15 (BST)

Event: ADB Virtual Business Opportunity Seminar 1: Energy, Healthcare, Education – British Expertise International

21^st of September

8:15 to 10:15 (BST)

Event: ADB Virtual Business Opportunity Seminar 2: Urban Development, Climate Resilience, Transport, PPP – British Expertise International

Our thanks to the Team at the British Embassy in Manila for kindly sharing these event details. If you have any questions then please contact:

Mr. Eron Tan: fredriceron.tan@fcdo.gov.uk

UK-China IP Newsletter August 2022

Dear CBI Members and Partners,

Please find the August 2022 IP Newsletter below highlighting the latest news and IP developments in China.

Download China IP Newsletter August 2022

For more information kindly contact: leo.zhuang@fcdo.gov.uk

China Direct would like to thank the IP team for sharing this information.

SE Asia Export Insight - Cambodia - a youthful country with a growing demand for imports

 

Cambodia - a youthful country with a growing demand for imports

 

Cambodia, located in the Mekong region, is a politically stable country with a consistently high economic growth and a highly dollarized economy (US dollars are widely used and accepted). It has the youngest population in Southeast Asia and Cambodians are known for being some of the friendliest and most adaptable people that you will ever meet! Read on to find out about the opportunities for exporting to Cambodia and if you want to hear more about the Cambodian market or any market in Asia Pacific, get in touch with the Export Support Service for Asia Pacific, we are here to help!    4 reasons why UK exporters should be considering Cambodia Growing demand for imported products and commodities from mass to luxury market , it is a transformative time for new products and services Cambodian income levels are rising across all socio-economic classes, means a growth in disposable incomes Cambodia imports more than it exports due to high domestic demand Cambodia has a favourable geographic location sharing borders with Thailand, Lao PDR and Vietnam with relatively easy access to international trade routes   What are the growing opportunities for UK sectors in Cambodia? The top 5 UK exports to Cambodia are cars, animal feeding products, medicinal and pharmaceutical products, beverages and clothing. The total UK exports amounted to £132 million in the four quarters to the end of Q1 2022 (an increase of 55.3% or £47 million compared to the four quarters to the end of Q1 2021). There are further opportunities for UK companies to cater to the country’s constant appetite for imported goods and services.  Agriculture This sector is one of the key drivers of economic growth and important industries in Cambodia. Though this sector is export-oriented, mostly are raw produce (e.g. rice, maize, mango, cassava, and rubber). There are significant opportunities in the agro-processing and agri-tech space such as heavy machineries, tools and technology to enhance crop yields, quality fertilisers and pesticides. Other opportunities lie in skills training in the agri-workforce. Consumer and Retail There has been rapid urbanisation in the cities, and many mega shopping malls, community, and boutique malls have opened. There are more than a dozen large shopping malls in the capital (Phnom Penh) with more planned until at least 2023. With these developments and growing population create a bigger demand for more consumer products. Luxury retail group and new brand entrants entered the local market during the time of pandemic, for example, Bluebell group, H&M, and OVS. There is a growing demand for baby products, such as clothing, cleaning wipes and toys. Additionally, there are opportunities in affordable to luxurious homewares, like furniture and decors. There is also a rising trend toward a sustainable, eco-friendly and organic beauty and personal care products. Food and Drink Young and worldly, the consumers are always open to trying new food products and changing lifestyles have led to changes in Cambodians’ eating habits, too. Categories that are expected to show continued growth include convenience foods and prepared grab-and-go foods, beverages and alcoholic drinks, dairy products, nutritional food for babies and children at mass and premium market level. Education and Training There are huge opportunities for education and training development through transnational education (TNE) partnerships, course development and internationalisation of curricula, vocational education, and enhanced uptake of education technology. There is a need to seriously address skills gap and reform programme for public education system. Teachers’ development is also needed. Healthcare and Pharmaceuticals The Cambodian healthcare system is still limited and it is fundamental to improve this sector. There are vast opportunities for UK companies such as providing training and expertise in the health workforce, medical technology, laboratory technology and biomedical engineering. Cambodia imported about 90% of its pharmaceutical in 2019 and its demand is expected to grow further. Additionally, there are growing numbers of hospitals and clinics, and most of the medical equipment, medical supplies and consumables are exported into Cambodia, hence, there are great export opportunities in this space to look out for. ICT and New Technologies Cambodia enjoys some of the cheapest and fastest internet connection among its neighbouring countries and soon to experience greater connectivity as a major Cambodian service provider has teamed up with global communications giant to deploy its ultra-fast gigabit broadband internet. The country’s connectivity levels have now reached to 13.4 million users, an internet penetration of 78%. A rapid surge of mobile users, a drive towards Industry 4.0, and emerging opportunities to be found within e-commerce are thought to be driving this trend. Digital payment transactions have seen a significant rise and cashless payments are mainly opted in the capital and expected to boom in coming years. Infrastructure The Cambodian government is investing heavily in infrastructure, often partnering with other countries (China, Japan, South Korea, and the European Union), private corporations, and seeks international development aid to fund major infrastructure projects. The China-backed Belt and Road Initiative (BRI) in particular has contributed to the rapid development of the transport infrastructure, hydropower plants, airports, and ports in Cambodia. In addition, there are a number of projects underway in preparation of the SEA Games in 2023 so there are opportunities for UK expertise in a range of sectors from construction (including health & safety and associated training), architecture, engineering, sustainable development, urban planning, etc. Renewable energy Cambodia’s rapid economic growth and population have led to an enormous electricity demand. The country needs to develop its energy supply to meet growing demand whilst reducing its carbon footprint. There are huge opportunities in renewable energy, this includes the provision of equipment, research, and quality control such as maintenance and repair. The strengthening trade relationship between the UK and Cambodia Though there is no official trade agreement exclusively between UK and Cambodia yet, Cambodia is benefitting with UK’s Generalised Scheme of Preferences. The scheme provides duty-free, quota-free trade on everything but arms. UK’s GSP will be replaced by the new UK’s Developing Countries Trade Scheme (DCTS) that will be rolled out in early 2023. The UK government is continuously committed to strengthening its trade relationship with Cambodia. Events 6 September, Opportunities in the Malaysian Healthcare and Life Sciences Sector 15 September, Toyko Game Show 2022 28 - 29 September, BYOND Mobile Thailand 28 September, Export Export Opportunities in Southeast Asia 11 - 12 October, BETT Asia 12 - 13 October, Ecommerce Export Asia 18 - 21 October, CEATEC: Toward society 5.0 22 - 29 October, Export Market Visit to Singapore 31 October, UK - Japan Nuclear Industry Forum 31 October - 4 November, DIT's International Trade Week 2 November, UK - Japan Digital Health Virtual Trade Mission 7 - 11 November, World One Health Congress 10 November, ASEAN Business and Investment Summit 2022 14 - 15 November, ASEAN Clean Energy Week 16 - 18 November, World Smart Energy Week Osaka 7 - 10 March, FOODEX 2023 15 - 17 March, World Smart Energy Week Toyko Keep up-to-date with news from DIT in Cambodia To keep up-to-date on this and more, do follow the UK in Cambodia Twitter and Facebook page. And if you’re ready to start exporting to Cambodia or any market in Asia Pacific, get in touch with the Export Support Service for Asia Pacific, we are here to help! Our sincere thanks to the DIT team for kindly sharing these business insights into Cambodia.