Yeoh warns that any sort of direct play requires research, but he has some handy tips. He says investors should look at what the Chinese will want to buy during the next decade. He also prefers established Western companies with a healthy exposure to China’s growth, notably luxury-goods companies.

”Generally, you would think that the corporate governance would be better for Western companies,” he says. ”There’s going to be more disclosure, and it’s a lot easier to understand a luxury-goods company generally than some sort of Chinese internet company.

[...] The downside is that the appeal of luxury brands can be fickle, and the saturation of brands could render them unpopular. ”[Shanghai women] always pride themselves as the most sophisticated and elegant and most open to the West,” Yeoh says. ”When they see the mistresses of the Shanxi coalminers wearing Louis Vuitton … they need to be wearing something else.”

See more on luxury demand in China via CDT.

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Post tags: conspicuous consumption, foreign businesses, foreign investments, luxury, luxury brands, middle class, mistresses, urban life
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China said Tuesday it planned to curb foreign investment in polluting sectors and instead direct it into high technology and new energy.

The State Council, the nation’s cabinet, said in guidelines on its website that it aimed to “seriously restrict (foreign investment) in high energy, highly polluting… projects”.

It added that foreign investment in “high-end manufacturing, high-technology and service industries, and new energy and energy-saving environmental sectors” should be encouraged.

© cctvcctv for China Digital Times (CDT), 2010. | Permalink | No comment | Add to del.icio.us
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The State Administration for Industry and Commerce (SAIC) is planning to strengthen supervision of the resident representative offices of foreign enterprises in China, according to a source within the department’s Bureau for Registration of Foreign-Invested Enterprises.

Under instructions from the State Council, SAIC has produced draft regulations entitled Registration and Administration of Resident Representatives Office of Foreign Enterprises. The draft regulations are currently being revised and are expected to be approved by the State Council some time in the near future.

“According to recent reports from local bureaus for industry and commerce, the current organization of representative offices of foreign enterprises is rather chaotic,” the source quoted above observed.

The EO has learned that some local bureaus have already begun inspecting local representative offices.

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Post tags: foreign companies, foreign investments
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China may allow foreign firms with investments inside the country to list domestically, as part of efforts to boost trader confidence during the global downturn, according to an official.

“We will continue to actively work with relevant authorities to study and complete the policy of allowing foreign-invested companies to list in the country,” Vice Commerce Minister Chen Jian told reporters.

“We will guide high-quality foreign-invested companies to carry out domestic listings at appropriate times,” he said.

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Beyond being good corporate citizens, do international firms operating in China have a moral duty to advance democracy and human rights?

Executives roll their eyes at the question: the typical answer is that companies know they must set an example in upholding labor laws or face the wrath of consumers and the threat of stiffer regulation; but no, multinationals have no business meddling in Chinese politics.

Michael Santoro, a professor of business ethics at Rutgers Business School in New Jersey, challenges that conventional view, arguing that foreign business can and should do more in the coming decade to shape social and political change in China.

In a new book, “China 2020,” Santoro says it is in the economic interest of Western firms to abandon their “complacent partnership” with the Chinese government.

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Foreign direct investment in China fell for an eighth month from a year earlier as companies cut spending to weather the worst economic slump since the Great Depression.

Investment slid 17.8 percent in May to $6.38 billion, the commerce ministry said at a briefing in Beijing today, after falling 22.5 percent in April.

China is relying on government-led spending under a 4 trillion yuan ($586 billion) stimulus plan to revive growth. Investment from abroad may increase when the global economy recovers from what the World Bank forecasts will be a contraction of almost 3 percent this year.

© Liu Yong for China Digital Times (CDT), 2009. | Permalink | One comment | Add to del.icio.us
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Morgan Stanley is raising a property fund worth 10 billion yuan with aims to expand its share in China’s property market, according to a source closed to the U.S. investment bank.

On July 4, Crystal I Ltd., a unit of Morgan Stanley, bought 30 percent of a real estate project in Hainan Province from developer Agile Property Holdings Ltd. (HKSE: 03383). The final price tag for the deal was 5.28 billion.

Agile Property won the bid of the project in 2006 and planed to invest a total of 13 billion yuan in ten years’ construction. However, when capital began running low, Morgan Stanley got the chance to buy in.

“Developers will only invite a partners into a project when they face a financing bottleneck,” said one analyst. A report from Guotai & Junan Securities showed that Morgan Stanley paid an average of 1,800 yuan per square meter for its stake in Agile’s project, a sum that fall quit a bit short of the market price.

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China saw a growth of almost 45 percent in foreign direct investment (FDI) actually used in the first seven months of this year, due partly to high interest from overseas investors, the Ministry of Commerce said on Wednesday.

But analysts said it should not rule out possibility for short-term speculative capital, or hot money, rushing into the mainland through Hong Kong.

From January to July, China approved the establishment of 16,891 overseas-funded enterprises, a decline of 22.15 percent from the same period last year. However, the FDI actually used nationwide amounted to $60.724 billion, up 44.54 percent.

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China tightened scrutiny of foreign direct investment to prevent “fake” ventures that the government said are acting as channels for speculative capital and endangering the world’s fastest-growing major economy.

Sham joint ventures and shell companies are among the conduits, the Beijing-based National Development and Reform Commission, said in a statement on its Web site today.

“Hot money” from investors attracted by a strengthening currency and interest rates at a decade high threatens to stoke inflation and destabilize the financial system in the event of sudden outflows. China’s foreign-exchange reserves, the world’s largest, soared 36 percent to $1.81 trillion as of June 30 from a year earlier.

Read also China to step up checks on FDI-related inflows by Reuters.

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Foreign direct investment (FDI) in China rose 45.5 percent in the first half of the year, deepening worries that the inflow of “hot money” could lead to higher inflation.

The Ministry of Commerce said on Friday that foreign investors spent $52 billion in China between January and June. In the same period last year, FDI increased only 12 percent.

The ministry did not provide figures for June, but based on data published for the first five months, the June figure is estimated at $9.6 billion, up from $6.6 billion a year ago.

Gene Ma, macroeconomic analyst at Beijing-based economic research firm China Economic Business Monitor, said: “The inflow increase is fast, but we don’t know where the money has gone.”

Read also FDI in China up 45.6% in Jan-June period by Xinhua.

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Post tags: foreign direct investment, foreign investments, hot money
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In a move likely to foreshadow increased overseas access to China’s growing financial sector, Beijing regulators have approved three joint trusts that combine foreign investors with Chinese institutions.

Meanwhile, Caijing has learned that the foreign access limits set last year by the Chinese Banking Regulatory Commission (CBRC) – a 20 percent cap for a single foreign investor, 25 percent for multiple investors — may be raised to 49 percent for joint trusts. Such a move would be in line with a current state policy that favors the gradual opening of the financial sector.

Foreign investors in the new trusts are the British bank Barclays, which teamed up with Xinhua Trust; National Australia Bank, which bought a stake in Lianhua Trust; and Britain’s Ashmore Investment Management, which signed a deal with Beijing Trust. Each overseas firm acquired up to 20 percent.

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General Electric plans to invest up to $2bn in acquisitions and other deals in China over the next three years as part of a strategy to double its revenues in the country.

The world’s biggest industrial company, which stunned investors last week when it announced its worst quarter of financial results in five years, is looking to hire a team of 20 “in-house investment bankers” to conduct the deals in China. “If we do not invest $2bn over the next three years, I would be disappointed,” said Steve Bertamini, chairman of GE’s greater China operations, in an interview with the Financial Times. The aggressive investment plans, which will include acquisitions and joint ventures, underline GE’s intention to expand its China business rapidly at a time when its domestic operations face a slowing US economy.

© Kate Zhao for China Digital Times (CDT), 2008. | Permalink | One comment | Add to del.icio.us
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The wave of foreign investment into China’s banking system has aspects of a gold rush. Foreign banks are staking out territory in promising but highly uncertain terrain. Last week Royal Bank of Scotland and its partners Merrill Lynch and Li Ka-shing became the latest to put down a sackful of dollars: $3.1bn for 10 per cent of Bank of China.

Shareholders generally look askance at such “strategic investments” – preferring that companies either acquire target businesses outright or do not invest in them at all. Those buying stakes in China plead special circumstances, with some justification. Nonetheless, there is clearly a risk that their capital will be squandered by managements better known for growing loans than for controlling bad debts.

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Post tags: banking, foreign investments, investments
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