China turns commercial battlefield for multinationals
By Hoo Ban Khee
BEIJING: China has emerged as the biggest hunting ground for the world’s largest transnational corporations as it embraces globalisation after becoming a World Trade Organisation (WTO) member three years ago.
According to China’s Ministry of Commerce, among the 2004 Fortune Global 500, about 450 have made investments in China, 400 have established research centres here and many have moved in their regional headquarters.
These are business giants who are strong in the fields of computer science, telecommunications, electronics, chemical industry, automobiles, building and construction, medicine, banking and insurance.
In a special article, Beijing Today, an English newspaper, named the 2008 Olympics as the magic wand that has turned China into a commercial battlefield for the multinationals.
According to the Beijing Organising Committee for the Games of the XXIX Olympiad (BOCOG), about 180 billion yuan (RM90bil) will be spent on infrastructure construction, 142 key projects, and refurbishing nine million sq metres of housing areas just to prepare Beijing to host the Olympics.
To those with resources, capacity and capability, all these means almost unlimited business opportunities awaiting exploitation.
In fact, a stream of foreign VVIPs including presidents, prime ministers and senior ministers has been waiting to do their PR with Chinese leaders.
Top industrial captains have also been knocking on China’s doors daily.
China had pledged to open up its banking, insurance, telecommunications, foreign and domestic trade, and tourism sectors step-by-step after joining the WTO.
Last year, China lifted restrictions on foreign insurers, opening key market segments like group insurance and annuities, and allowing foreign insurers to operate in all Chinese cities.
Licences for the importation of cars have been cancelled as a new policy is being set up.
Since last year, the Government has also allowed foreign banks to do renminbi transactions in 18 cities and foreign media groups to set up joint ventures with local partners to produce TV programmes.
Some sensitive service sectors such as commercial wholesale and retail, construction and the flow of goods and materials have also been opened to the outside world since the end of last year.
While many of these multinationals have signed up as Olympics partners, others are here for the long haul. Among the giants are:
the Nestle group, which has made direct investment of 1.2 billion Swiss francs (RM3.5bil) in the greater China region in the last 14 years.
It operates 20 plants in China and has a research and development centre in Shanghai.
Josef Mueller, CEO of Nestle (China), said the group was settling up a new dairy production base in Erguna, Inner Mongolia to produce high quality fresh milk.
Electrolux (China), which has invested US$40mil in a new washing machine line to produce 500,000 units and is also expanding its refrigerator manufacturing to 1.3 million units.
Don Gadsden, president of Electrolux Home Appliances Co Ltd, said, “China has unlimited market potential while we have limited human and capital resources to cover many fields.” Electrolux has 2,000 outlets in China.
Mitsubishi Heavy Industries, which aims to secure several of the 20 to 30 nuclear power plants to be established in China by 2020.
Currently, it is looking at a light rail project between Beijing International airport and Dongzhimen to be completed before the 2008 Olympics.
ThyssenKrupp AG, which has set up joint ventures and subsidiaries covering the steel, automotive parts, elevator, technology and services sectors in more than 10 cities including Shanghai, Dalian, Xuzhou, Changchun and Wuhan. In fiscal 2003-2004, its sales totalled one billion euros.
ABB Power and Automation Technology Group: last year, it grossed sales of US$2bil from China.
The German firm has signed an order worth US$390mil to build a 1,100km-long 3,000 megawatts transmission link from the Three Gorges hydropower plant to Shanghai. The company hopes to gross revenue of US$4bil by 2008.
Intel, which has 13 branches in China and also research centres in Beijing and Shanghai to develop local talents and localise technology efforts.
Electicite de France: it is currently developing high-tech batteries for electric transportation but is eyeing nuclear power generation in the future.
China in 2020 will need 1,000 gigawatts when the increase in electricity by other means would be difficult because of environment and pollution problems, leaving nuclear power the only viable answer.
McDonald’s, which operates 52 factories in China.
The survey noted that the small and medium-scale enterprises (SMEs) also have huge potential to attract foreign investments, as an enormous number of SMEs are rapidly becoming aware of the overseas market and are hungry for new technology and financial investments.
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