By Qiu Quanlin
On July 28, President Hu Jintao (second right) meets Indonesian President Susilo Bambang Yudhoyono (first right) at the People' Great H
The Indonesian government will speed up efforts to promote its investment environment at the ninth China International Fair for Investment and Trade (CIFIT), to strengthen business ties between China and Indonesia.
The Southeast Asian country first participated in CIFIT in 2004.
"Fruitful results have been reached after the successful experiences at the fair last year," M.M.Suwito, director of the Indonesian Consul for Economic Affairs in Guangzhou, said in an exclusive interview with the Express.
The official trade volume between China and Indonesia stood at US$6.7 billion for the first five months of this year, indicating an annual rise of 37 per cent.
Suwito said the country would redouble its promotional activities in China this year thanks to the improved bilateral business ties.
According to Suwito, the Indonesian government will organize a business delegation of renowned enterprises to visit this year's CIFIT.
The ninth CIFIT is scheduled for September 8-11 in Xiamen, a coastal city in Southeast China's Fujian Province.
By the end of June, governmental institutions from 63 countries and regions and 165 overseas business delegations had registered for the upcoming business gala, sources with the fair's organizing committee said.
The Indonesian delegation will hold a number of business-related events at the fair to promote its general consumer trade, tourism and investment environment, according to Suwito.
"The fair has proved to be a unique event that facilitates bilateral and multilateral trade activities with countries from around the world," Suwito said.
CIFIT provides an ideal opportunity for Indonesian government to attract more Chinese enterprises, as well as overseas counterparts, to invest in Indonesia, he added.
In addition to its promotional efforts in Xiamen, the Indonesian government will also organize several promotions in Beijing, Shanghai and Nanning, capital of the Guangxi Zhuang Autonomous Region.
The ASEAN-China Expo will be held in November in Nanning, where the Indonesian government is set to arrange a larger scale business activity, to further promote its trade, tourism and investment environment in China.
Meanwhile, the southeast Asian country will also promote its food and drink products in Shanghai at the 14th International Exhibition for Food, Drinks, Hospitality, Bakery and Supermarket, which is to be held in Shanghai from November 15-18.
The economic and trade partnerships between China and Indonesia have experienced rapid development in recent years.
Official statistics show that two-way trade volume reached US$13.48 billion in 2004, up an annual 31.8 per cent.
China has become Indonesia's fourth largest trading partner, while Indonesia is China's 18th.
China chiefly exports electrical appliances, electronic equipment, machinery, furnishings, textiles and motorcycles to Indonesia. Indonesia's main exports to China include crude oil, natural gas, palm oil, paper, paper pulp and timber.
"Indonesia is one of the best options for Chinese investors, and they are welcome to participate in the building of Indonesia," said Suwito.
Chinese investment in Indonesia totalled US$6.5 billion over the last five years, with investments in the energy sector alone equalling US$1.2 billion.
Indonesian investments in China, meanwhile, reached US$2 billion by the end of 2003, according to official statistics.
More than 10 Chinese and Indonesian businesses signed co-operation agreements in early July when Indonesian President Susilo Bambang Yudhoyono visited China.
The agreements, worth over US$4 billion, involve finance, oil, gas, engineering and information technology projects.
The China-ASEAN (Association of Southeast Asian Nations) Free Trade Area, which was implemented on July 20, is expected to facilitate bilateral trade ties between China and Indonesia.
"Along with its initiation, trade barriers between the two sides are being gradually eliminated, and the bilateral economic and trade relations have thus seen a more powerful driving force," said Suwito.
Hu Jingyan and Wang Xiaohong
Chinese enterprises need to devise overseas direct investment strategies that take into account the changing environment.
As the global economy becomes increasingly integrated, the interdependence of economies becomes more important.
Foreign direct investment, shepherded by multinational companies, has profoundly changed the international division of labour landscape.
The world economy is increasingly shifting from a world trade-dominated model to one that is fuelled by international direct investment.
Domestically the fast-growing economy has laid firm foundations for enterprises to seek opportunities abroad. Chinese companies are at the same time becoming stronger individually.
In 2004, 18 Chinese enterprises appeared on the world's 500 largest companies list.
Overseas expansion, therefore, is now a viable option for those powerful firms.
The fierce competition in the domestic market is another factor driving many enterprises to seek overseas investment opportunities.
This is especially true of the manufacturing industry.
In many product categories, China's manufacturing capacity is leading the world, with excessive supply of some commodities.
Clearly the domestic market is no longer big enough to accommodate such massive production capacity.
For enterprises in those industries, boosting foreign trade and seeking overseas direct investment is an efficient way to relieve mounting pressure in the domestic market.
International trade friction and trade barriers usually have a large effect on overseas investment.
China's foreign trade surged dramatically after its accession to the WTO, but there was also a contemporaneous spike in the number of disputes with trading partners.
China is the country most exposed to anti-dumping cases.
In 2004, 16 countries and regions lodged 57 cases of anti-dumping, anti-subsidy or other safeguard measures against China, involving US$1.26 billion in goods volume.
Many countries are racing to erect trade barriers to fend off Chinese imports.
Overseas direct investment, which can bypass barriers and reduce trade friction, is naturally favoured by investors and recipient countries alike.
Chinese enterprises' mergers with and acquisitions of European firms have been on the rise since the EU imposed trade barriers in recent years targeting Chinese products.
Overseas direct investment by Chinese companies is currently mainly concentrated in labour-intensive industries such as resource-drilling and manufacturing.
In 2004, Chinese enterprises' overseas direct investment in the mining industry was US$1.9 billion, accounting for 53 per cent of its total overseas investment in that year, while manufacturing accounting for 14 per cent, at US$490 million.
So far, developing countries have been the principal recipients of Chinese enterprises' overseas investment.
By the end of 2003, China's total overseas investment stood at US$33.2 billion, among which the Asia part accounts for 80 per cent, followed by Latin America with 14 per cent.
But enterprises' overseas investments have been plagued by a host of problems.
Because of relatively low industrial technology levels, many Chinese enterprises enjoy a small competitive edge in their overseas forays.
They lack expertise in overseas direct investment and operational experiences.
The textile industry is a sector in which China has traditionally held a comparative advantage in the international marketplace.
Chinese textile firms should have invested in countries or regions where the textile industry is underdeveloped, so they could make full use of their competitiveness.
The fact that State-owned enterprises are the major players in terms of overseas direct investment is also unfavourable.
At a time when there is no effective mechanism in place to supervise State assets, many such investment projects end up failing.
Until now China has not had a complete set of laws and policies concerning overseas direct investment.
The approval procedure is still too rigid and, in some cases, discriminates against private firms.
Enterprises should learn from multinational companies' experiences and adjust their overseas direct investment strategies accordingly.
Chinese companies, while continuing to invest heavily in developing countries, should also step up their investment drive in developed countries where they will be able to learn advanced technology as well as management expertise.
They should also refine the structure of their overseas investments.
Investment emphasis should be shifted from labour-intensive industrial projects to service sectors such as finance and logistics.
Localization is a basic rule for successful overseas business ventures, and is also true of Chinese companies which want a piece of the action in foreign countries.
They must learn how to operate their businesses under local conditions and strive to integrate their operations with the host country's economy.
Choosing a proper investment mode is also of vital importance for Chinese firms aspiring to go abroad.
In this regard, investment through mergers and acquisitions is strongly encouraged.
Setting up joint ventures as an initial step in foreign direct investment is a proven strategy for many multinational companies - a pattern that Chinese companies should also follow.
As multinational companies become more familiar with the local business environment they may choose to merge with or acquire local firms.
Drawing up effective overseas investment promotion policies is an effective way to help enterprises' investment strategies develop.
It is recommended that overseas investment promotion agencies, either government-run or private, be set up to provide consulting services to companies hoping to invest abroad.
The government should reform the current overseas investment approval system and encourage private firms to seek their fortune on foreign shores.
In addition, the government should extend credit and tax favours to encourage high-tech firms to initiate overseas investment programmes.
Hu Jingyan is the director of the Department of Foreign Investment Administration under the Ministry of Commerce; Wang Xiaohong is an editor at Macroeconomics, a monthly magazine based in Beijing.
By Chen Wei
A Project Matchmaking Symposium exclusively for domestic listed companies to be held on Sept 11 will be dedicated to providing them with a more useful platform to better meet their investment demands, the Organizing Committee of the 9th CIFIT has announced.
The domestic listed companies will be looking for investment opportunities, while the matchmaking parties will be comprised of enterprises and officials from member units of CIFIT.
An estimated 60 listed companies are expected to join the symposium as investors, although the committee noted that total attendance would probably extend to 100 by the time the event is held.
Zeng Junsheng, Head of the Project Department of the Organizing Committee, told International Investment Express that at the Project Matchmaking Symposium last year many listed companies had come to participate and seek investment projects and opportunities.
"The requirements of each group attending CIFIT varies, so we must treat them separately to make full use of CIFIT as a platform to promote investment," said Zeng.
He added that most of the domestic listed companies are favourable investors. First, they are competitive companies with good potential, reputations and regulations. Second, most of them have adopted a strategy of expanding nationwide and possess adequate funds and a strong desire to invest. Finally, listed companies have a more diverse and wider range of investments, so member units are more likely to find suitable investment projects for them.
According to last year's results, both enterprises and officials from member units were more willing to engage in project matchmaking with listed companies, due to the fact that the investing parties and project parties were all domestic. They had more chances to get to know one another, and it was faster and easier to bring their projects to fruition if both sides had a common interest.
In a bid to provide more choices and opportunities for the member units, any late-arriving investors from home and aboard will be able to meet potential partners as well.
Moreover, member units will be encouraged to take part in other symposiums simultaneously, including the Foreign Investment Projects in China Project Matchmaking Symposium, Domestic Investment Co-operation Project Matchmaking Symposium and Project Matchmaking for Listed Companies, to reach a maximum matchmaking success rate.
UNIDO delegation to visit 9th CIFIT
The United Nations Industrial Development Organization (UNIDO) will send a ten-member delegation to the 9th CIFIT to conduct a number of informative events and activities.
Along with running its own exhibition booths, UNIDO will co-organize forums with the Ministry of Commerce, addressing such themes as industrial technology innovation, South-South co-operation and investment development, and other timely topics. The delegation also plans to introduce more than 300 investment projects in Africa to the Project Matchmaking Symposium.
As a multilateral technology reinforcement organization under the United Nations, UNIDO is primarily dedicated to helping promote and accelerate industrialization in developing countries in co-ordination with the UN.
OECD joins other CIFIT co-hosts
The Organization of Economic Co-operation and Development (OECD) has signed on to take part in the running and hosting of CIFIT as one of several co-operative organizations supporting the fair. The OECD will attend the upcoming 9th CIFIT in Xiamen. To date, five major international economic organizations have committed to jointly holding this year's CIFIT.
Established in 1961, the OECD has 30 member nations, including Canada, Denmark, France, Germany, Greece, Italy, Holland, Spain, Switzerland, England, the United States, Japan, Australia, New Zealand, Mexico and South Korea, among others. The OECD is sometimes referred to as "the club of rich nations" because its member countries are all relatively developed economically.
As a collaborator, the OECD will actively promote CIFIT and encourage its member nations to attend the fair. The OECD's involvement will not only help further broaden CIFIT's exposure, but also elevate the international influence of this annual event.
International Friend Chambers of Commerce Roundtable scheduled for Sept 7
As one of a series of forums to be held at the 9th CIFIT, the Fourth Session of the International Friend Chambers of Commerce Roundtable will be held at the Xiamen Jinyan Hotel on September 7.
The forum's theme will be "The role Chambers of Commerce play in the promotion of economic development in China and Southeast Asian Nations". The content of the forum will include: How Chambers of Commerce can assist enterprises in the promotion of co-operation in competitive fields; ways in which Chambers of Commerce can facilitate mutual trade between China and Southeast Asian Nations; and, suggestions Chambers of Commerce can offer regarding cargo trade, service trade and investment.
Respected presidents of several Chambers of Commerce and other high-profile officials will be invited to speak. Discussions with foreign Chambers of Commerce will be arranged as well, with the aim of promoting economic exchanges and development.
Capital forum remains a focal point
A regular feature of CIFIT, this year's Capital Forum will be held on September 10.
The theme of the forum will be "management and supervision of listed companies". In addition to such previous participants as the Hong Kong Stock Exchange, US NASDAQ Stock Exchange, London Stock Exchange and Canada Toronto Exchange, the Capital Forum has also invited, for the first time, representatives of the Tokyo Stock Exchange and South Korea Stock Exchange.
Officials from the China Securities Regulatory Commission (CSRC) and other government departments, representatives from domestic and international stock exchanges, management personnel of some large domestic listed companies and renowned scholars from home and abroad will also be invited to give lectures and present their opinions in Xiamen.
CIFIT introduces online registration
To regulate and improve the efficiency of the registration process, CIFIT's organizing committee has adopted an online registration system for the 9th session of the fair. The online registration management system, as developed by the organizing committee, is now up and running.
Member guests and investment groups can apply for entry permits to the fair via the sponsors that invited them, while other potential investors and visitors can apply online at http://www.chinafair.org.cn.
Group exhibitors may ask their organizers to handle online registration on their behalf, while other exhibitors can complete online registration themselves via “Participation Consultation” at http://www.chinafair.org.cn.
Day added for popular project matchmaking
Due to the overwhelming response to the project matchmaking symposium scheduled for the upcoming 9th CIFIT, an additional day of sessions has been added, to allow more member guests to meet and discuss mutual business opportunities.
The project matchmaking forum sessions include: "Foreign investors: Dialogue on investment fair"; "Domestic investment and co-operation: Project matchmaking"' "Chinese enterprises investing abroad: Matchmaking"; and, "Asian & European meeting member nations: Matchmaking".
Some of the more competitive investors will be invited to introduce their investment plans so as to improve the efficiency of the project matchmaking forum.
The organizing committee of the 9th CIFIT decided to add an extra day of sessions after receiving project applications from nearly 80 countries and regions, including 11,270 applications from domestic investors and 420 from overseas investors.