NANNING, China -
Beijing and the governments of the Association of
Southeast Asian Nations (ASEAN) have reached a
consensus on what matters need to be negotiated
for service and investment markets to be opened.
However, specific matters still need to be
discussed. Service and investment trade is a much
more complex problem than commodity trade and
needs to be defined by experts.
China's
investment in ASEAN In the early stages,
China's investment in ASEAN countries was
mainly
focused on labor export, project contracting,
processing, assembling and small production
projects.
Now this has expanded to include
agriculture, forestry, machine-building,
information technology, telecommunications,
finance, labor, tourism, energy and resources
development, trade, communications, science and
technology, education, construction, hotels,
labor-resources development, and development of
the Mekong River Valley. Chinese enterprises now
are emerging in the markets of ASEAN countries as
investors instead of contractors.
China
has exported its traditional industries where it
has technical advantages, such as silk-weaving
technology and hybrid-rice production, to ASEAN to
help local farmers increase profits. Since this
year, Guangxi State Farms Group has developed the
cassava industry in Thailand, Myanmar and Laos,
expanding those countries' sources of modified
starch by providing them with better planting
technology.
It is estimated that China's
agri-technology exports have brought to ASEAN
countries benefits exceeding 30 billion yuan
(US$3.8 billion).
Meanwhile, the Chinese
government has promoted the strategy of "going
out", fueling the enthusiasm of Chinese
enterprises for investing in ASEAN countries.
Ministry of Commerce statistics show that by the
end of 2005, China's total MOC-approved investment
in ASEAN reached $1.08 billion; the value of labor
contracts signed was $35 billion; and the
operating turnover achieved was $23.2 billion.
By the end of 2005, Chinese enterprises
had opened more than 1,000 non-financial
enterprises in ASEAN countries, covering the areas
of processing, assembling, small production
projects, construction, hotels, mining and
communications. The type of investment ranges from
direct investment and technology investment to
build-operate-transfer (BOT). China has remained
the No 1 investor in Cambodia for three years
running.
China's large-scale investment in
ASEAN countries is becoming an important way of
establishing bilateral cooperation, including its
large-scale aid to infrastructure construction in
Vietnam, Cambodia, Myanmar and Laos.
It is
understood that in the next three years, the
Chinese government will offer one-third of its $10
billion in preferential loans to developing
countries to ASEAN nations. By the end of this
year, China will have provided an additional $5
billion in preferential loans to encourage Chinese
enterprises to invest in ASEAN countries.
In comparison with ASEAN's investment in
China, China's investment in ASEAN countries is
small, but promises huge potential and is growing
rapidly. In the process of investing in ASEAN
market, Chinese enterprises have gradually worked
out three modes of investment: state-launched
enterprises; cross-border mergers and
acquisitions; and construction of industrial
parks.
Stable political relations and huge
markets are facilitating cooperation between China
and ASEAN countries. According to MOC statistics,
the investment from the Chinese mainland in ASEAN
enterprises totaled $1 billion by the end of 2005,
compared with the $38.5 billion investment in
China by ASEAN. China's investment in ASEAN may
increase by 60% this year.
It is
understood that the Third China-ASEAN Expo has so
far put forward 7,560 projects, of which 294 are
being offered by China for foreign cooperation,
and 501 are business promotions and capital
introduction projects initiated by ASEAN
countries.
Experts believe China should
highlight and strengthen its cooperation with
ASEAN countries in the fields of information
technology, medicine, health care, mass media, and
infrastructure construction. Likewise, China
should increase its investment in natural
resource-type industries in ASEAN; for example,
rubber, timber products and chemicals.
ASEAN countries are increasing investment
in electronic information, bio-science, offshore
engineering, financial management, and tourism.
Chinese enterprises may also seek investment
opportunities in these fields.
Experts say
Singapore hopes to promote cooperation with China
in the service sector; Indonesia is in the initial
stages of industrialization, and may seek more
investment from China; and underdeveloped ASEAN
countries, including Cambodia, are eager to
cooperate with China in resources development and
infrastructure construction. Meanwhile, they say,
Chinese enterprises should actively get acquainted
with the culture, customs, market patterns,
policies and rules and regulations of ASEAN
countries, to be fully prepared to cope with the
local environment.
China's private sector
may also find huge business opportunities in the
establishment of the China-ASEAN Free Trade
Agreement (CAFTA). Private enterprises may expand
by developing products that are needed by ASEAN
countries, and establishing sound marketing and
service networks.
As the pace of CAFTA
implementation speeds up, Chinese enterprises will
find more business opportunities in ASEAN
countries, and the preferential policies offered
by countries will encourage more Chinese
enterprises to invest there.
Tourism
between China and ASEAN exceeded 6.5 million
people in 2005. Some 3 million Chinese citizens
visited ASEAN countries, while more than 3 million
citizens from ASEAN countries toured China. This
accounted for about one-fifth of total foreign
tourists China hosted in the year, while Chinese
tourists account for nearly half of the Southeast
Asian tourism market.
Statistics provided
by the Civil Aviation Administration of China show
that by August this year, there were 644 flights
operating between China and ASEAN countries every
week - 563 passenger flights and 81 freight
flights. Nine Chinese airlines and 16 airlines
from ASEAN countries have established regular
passenger and freight air routes between 20
Chinese cities and 22 ASEAN cities. In January
2003, ASEAN tourism ministers agreed unanimously
to implement the ASEAN Tourism Agreement. This
means that once China signs a no-visa-required
tourism agreement with one ASEAN country, Chinese
tourists may tour all ASEAN countries freely.
According to related regulations,
Chinese-made products and services may enter the
ASEAN market free of duty and quotas in the next
five to 10 years. Thus Chinese enterprises must as
quickly as possible become acquainted with ASEAN
market rules and adopt corresponding measures, if
they want to access the market. Chinese
enterprises have fared poorly in this field in the
past. According to MOC statistics, under the
"Early Harvest" program, only 17.9% of China's
exports to ASEAN were granted a "preference
certificate of origin" and the related
preferential tariff.
Finally but most
important, Chinese enterprises lack commercial
channels in ASEAN countries and do not carry out
feasibility studies of the ASEAN market, which
often leads to blind investment.
A lack of
understanding of the local culture and market
often dooms Chinese enterprises to failure.
