China Focuses Investment on Belt and Road Countries

Chinese companies' acquisition activities along the Belt and Road countries have increased this year in spite of a dramatic fall in overall Chinese outbound investment, according to the latest Thomson Reuters data.

 

                                                    image credit: internet

The data showed that Chinese firms have invested in mergers and acquisitions to the value of $33 billion in the 68 countries along the Belt and Road map as of August 14, surpassing the $31 billion figure for the whole year of 2016.

The increase in investments in the Belt and Road countries is compared with a 42 percent drop in all Chinese international mergers and acquisitions over the same period, the Thomson Reuters data showed.

The UK has also proven a major target for Chinese buyers. Thomson Reuters tracked 29 Chinese takeovers of UK companies worth a total of 13 billion pounds ($16.7 billion). At the same time last year, 25 deals worth 3 billion pounds had been agreed.

Mike Wang, partner at the Chinese law firm King & Wood Mallesons said the data matched their business experience. "Our clients are finding it much easier to foster constructive relationships with target companies on the Belt and Road map, with support from both the Chinese government and the target company’s government," he said.

First proposed by President Xi Jinping in 2013, the China-led Belt and Road initiative aims to increase trade and investment among Asia, Europe and Africa.

President Xi also said at the Belt and Road Forum in Beijing in May that China will contribute an additional 100 billion yuan ($14.49 billion) to the Silk Road Fund for investments in Belt and Road countries.

Xue Haibin, managing partner of Zhong Lun Law Firm's London subsidiary, said the growth in UK-focused deals is supported by the UK government's attempt to foster closer ties with China and Asia amidst Brexit uncertainties.

"The UK is proactively positioning itself as an important part of the Belt and Road map. Because Belt and Road strategy development needs both real economy and financial collaboration, the UK’s strength in financial services gives it a unique advantage," Xue said.

The number of Chinese deals targeting Belt and Road countries totaled 109 this year, compared to 175 in the whole of last year and 134 in 2015, the Thomson Reuters data showed.

The largest deal in a Belt and Road country so far this year was a Chinese consortium's $11.6 billion buyout of the Singapore-based Global Logistics Properties, announced in July. The consortium comprises Hopu Investment Management, Hillhouse Capital Group, Vanke Group and Bank of China Group Investment.

Another top deal is China National Petroleum Corp's $1.8 billion purchase of an 8 percent stake in Abu Dhabi National Oil Co, announced in February.

Andrew Monk, CEO of VSA Capital Plc, a London-based investment bank with a subsidiary in Shanghai, said from his observations most of China’s outbound deals along the Belt and Road countries fit into China's strategic development.

"The deals done so far are in sectors that add value to China’s strategic growth, especially in areas such as technology, renewable energy and green industries," he said.

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Will China-Made Volvo Cars Win A Big Success in Belgium?

Belgium will become an important partner of The Belt and Road? How do Belgium & China do? 

A freight train carrying 123 brand new Volvo cars made in northeast China arrived in the Belgian port of Zeebrugge Friday afternoon, marking a milestone in the history of cargo transport between the two countries.

The train was welcomed by government officials, diplomats, business representatives and journalists from both countries after a journey of 9,832 kilometers, which took some 20 days, passing through Russia, Belarus, Poland and Germany.

The shipment carried the S90L, Volvo's flagship model, manufactured in the company's Daqing plant in northeast China's Heilongjiang Province.

image credit: internet

A staff member from the car manufacturer at the site told us that all the cars have been reserved and will soon be distributed across Europe from the port.

"If we ship the cars by sea it will take up to 60 days, now we can save over 40 days. We also managed to find a balance between saving time and controlling shipping costs," said Yuan Xiaolin, senior vice president of Volvo Car Group attending the welcome ceremony.

Following the arrival of the first train, the Volvo rail cargo service will continue to run at least once a week, and eventually reach the goal of four to five weekly round trips.

Every year the trains are expected to bring 30,000 to 40,000 new Volvo vehicles to Zeebrugge, an open seaport handling over 40 million tons of cargo annually, and ferry Belgian products to China on their return journeys.

Belgian deputy Prime Minister Kris Peeters, who visited the Volvo Daqing plant during his visit to China in May, hailed the arrival of the train as an example of "concrete results of the Belt and Road Initiative".

The initiative aims to build a trade, investment and infrastructure network connecting Asia with Europe and Africa along the ancient Silk Road.

Peeters stressed that Belgium is demonstrating strong willingness to participate in the Belt and Road initiative as a partner.

"The 21st Century Silk Road marks a new era for trade and cooperation between Belgium and China. As we see today it provides great opportunities for countries to deepen cooperation," said Peeters.

"We firmly believe that strengthening train connectivity and investing in excellent infrastructural links will be a crucial aspect of Europe's future relations with Asia," he added.

Qu Xing, Chinese ambassador to Belgium, believes that the potential of this new train service is tremendous.

"Belgium has great advantages in carrying out cooperation with China under the framework of the Belt and Road initiative," said the ambassador, underlining that Belgium boasts three of the 10 biggest ports in Europe.

As of early June, over 4,000 cargo train trips have been made between Chinese and European cities since the start of the direct rail freight services six years ago, according to Chinese national operator China Railway Corporation.

What do you find from the news? As we are global trade, we should identify the big market in Belgium.

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