China Wirtschaftsforum 2016

1. BILATERAL TRADE
CHINA´S SILK ROAD, 16+1 STRATEGY,
CHINESE FDI IN EUROPE & AUSTRIA
A Briefing Tour d´Horizon & Update by Commissioner Schierer,
Außenwirtschaft Austria / ADVANTAGE AUSTRIA
October 1st, 2015
1/18

2. TODAY´S #HASHTAGS
2/18
 # Austria #Hongkong #China (1 slide)
 #OBOR (3 slides) #16+1 (2 slides)
 #FDI (2 slides)

3. #AUSTRIA: HONG KONG & CHINA
3/18
 Bilateral Trade Development
 Hong Kong
• Trade
Q1-2/2015: Austrian exports +8.8%
2014: Austria: EUR 520 m, Hong Kong: EUR 82 m
Austria´s largest trade surplus in Far East
• Austrian companies
2008: 97
2015: 230+
 China
• Trade
Q1-2/2015: Austrian exports: -3.3% (ww -15.6%)
2014: Austria: EUR 3.38 bn, China: EUR 7.3 bn
Trade deficit: EUR 3.94 bn
• Austrian companies
2008: 350
2015: 470 (600)

4. 4/18
#OBOR: ONE BELT, ONE ROAD
 Definition
 One Belt = Sea
 One Road = Land
 Huge Vision & Corner Stone of China´s Foreign Policy
 Background Facts
 The „Silk Worm Encounter“: 4,000 years ago in China
 France started in 16th century with Silk production
 Re-load in 2013 by President Xi Jinping
 Historic routes connecting China with Europe
 To improve infrastructure connectivity
 Participating countries
 40-60 countries and regions
 Concerns some 3 billion people
 Few agreements signed so far

5. #OBOR: GEO-ECONOMICS
5/18

6. #OBOR: WHAT ?
6/18
 What is it about ?
 Network of railways
 Oil and gas pipelines
 Power grids
 Internet networks
 Investment and finance figures
 Expected infrastructure costs: USD 22 trillion
 Required investments p.a. till 2020: USD 730 billion
 Set-up of SRF: USD 40 billion (operating)
 Set-up of AIIB: USD 100 billion, 58 members (from 2016)
 China spends USD 1 trillion in one decade
 Expected Chinese annual trade by 2025: USD 2.5 trillion

7. #16+1: CUTTING OUT EU ?
7/18
 Set-up
 2011 kick-off in Budapest
 16 Central East European countries + 1 China
 Romania, Serbia, Hungary & Poland strategic partners (GER & AUT ?)
 What is it about ?
 Backdoor entrance into, image campaign, hub for #OBOR
 Enhancing political trust between China and CEE, partial elimination of
ideological differences, lobbyist for China in EU
 Exploring economic/trade potential
 Creating a large number of co-operative projects
 Strengthening cultural & people-2-people exchange
 Projects
 Investments and going out strategy
 Highspeed railway Belgrad – Budapest
 TRECECA - Transport Corridor Europe-Caucasus-Asia
 Strengthening of Slovenian port of Kopa

8. #16+1: OBSTACLES A 2ND CHINAFRIC?
8/18
 Obstacles
 Immense diversification of the region
 Barriers related to EU law
 Insufficient expertise of Chinese companies
 Asymmetric economic needs within 16 and 16+1
 No willingness within the 16 to develop intra-co-operation
 CEE is part of Europe and not part of Eurasia
 NATO and security topic
 A 2nd ChinAfric ?
 Half hearted approach by China
 Seen only as outskirts of EU
 Religious, ethical issues. Cultural differences bigger than expected
 Strong individuality within the 16
 16 have a missconception of China (Euro crisis vs Big spender)
 China nominates preferred and less preferred states

9. 9/18
#FDI: CHINA ON A SHOPPING SPREE
VOLVO, CLUB MED, PIRELLI, AC MILAN,
ROSENBERGER – WHAT NEXT??

10. 10/18

11. 11/18
START OFF: RMB A WORLD CURRENCY ?
Source: SWIFT-Report 2014/15

12. 12/18
EXCURSION: DON´T BE SCARED!
CHINA´S CAPITAL ACCOUNT ONLY STARTS TO OPEN UP…
Source: Hong Kong Exchange & Clearing
….in Trillion US-Dollar

13. 13/18
CURRENT FRAMWORK SETTING
OF CHINESE FDI POLICY
 Favorable FDI policy
 High net investment amount
 Among 10 largest banks worldwide: 5 Chinese
 FDI investments grew 15-fold in the last 10 years
 Among 8 largest Sovereign Wealth Funds: 4 Chinese
 September 2014: MOFCOM eases „Overseas Investment Rules“
 Only FDIs in „sensitive“ regionen and industries need approval
 Approval period: 3 days, 20 days for SOE through NDRC
 Fast track and high flexibility for biddings, high competitivness
 Almost no check of balances for offshore investments and re-financing by SAFE, high flexibility
 March 2015: „Belt & Road“-Initiative
 April 2015: Premier Li Keqiang: „Charge out into the world!“
 April 2015: China eases FDI regulations
 Public diplomacy abroad by Chinese president Xi Jinping
 4Q 2015: Establishment of AIIB
 2Q 2016: 1 EU-China FDI agreement vs. 26 FDI agreements
 Weak European market
 EUR , debt crisis, weak economy, low capitalization of companies, succession problems
 Special investment programmes in Portugal, Spain, Greece
 No Patriot-Act in EU, geo-economic non-strategy within EU

14. 14/18
WHY DOES CHINA INVEST ABROAD?
 Securing domestic demand and economic growth in China
 Raw materials, energy, agriculture, food
 Support of „slow“ Chinese economy
 Strengthening and expanding international competitivness through
technology, Know-how and Management acquisition
 Nuclear energy
 Automotive and Transport (Saab, Volvo, MG, Steyr Motors, Palfinger, ATB, WBL, Pirelli)
 Hightech (FACC, IBM)
 Consumer goods (OmniVision, House of Fraser, Huber Tricot)
 Tourismus, hotels (ClubMed, Thomas Cook, PizzaExpress, Rosenberger)
 Sports, Media (AC Milan, Infront)
 Diversification and ROI strategy
 Luxury brands/ -integration (Feretti, Cerruti, Folli Folie, Aquascutum, Salvatore
Ferragamo, Pierre Cardin, French wines)
 Poperty and real estate
 Utilities (water, energy,…)
 Banking and insurances (pension and retirement funds)

15. 15/18
DEVELOPMENT OF CHINESE
FDI (WORLDWIDE)
Chinese FDIs will continue to be stable Number of M&A will increase
In a nutshell: No more mega deals. More small and medium sized
specialised deals within the Hidden Champion group.

16. CHINESE INVESTMENTS IN 2014
BY COUNTRIES AND SECTORS (WORLDWIDE)
16/18

17. 17/18
CHINESE INVESTMENTS IN 2014
BY SECTORS (WORLDWIDE AND EU28)

18. 17/18
CHINESE FDI:
BY COUNTRIES (TOTAL ASSETS IN BILLION USD, 2005-2014)
0,1
0,12
0,14
0,4
0,9
1,1
1,6
1,8
2,4
2,4
2,4
2,7
2,9
4,5
4,6
5,4
5,5
5,9
6,9
8,2
9,1
10,6
20,9
23,6
39,4
61,3
71,9
0 10 20 30 40 50 60 70 80
Tschechische Rep.
Bulgarien
Österreich
Mazedonien
Bosnien
Montenegro
Polen
Rumänien
Ukraine
Serbien
Spanien
Schweden
Weißrussland
Norwegen
Ungarn
Portugal
Griechenland
Deutschland
Italien
Schweiz
Türkei
Frankreich
Rußland
GB
Kanada
Australien
USA
Source: Heritage Foundation, American Enterprise Institute,
China Global Investment Tracker, AC Hongkong

19. 19/18
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Christian H. Schierer
Head ADVANTAGE AUSTRIA Hong Kong
Hong Kong, Macao & South China
ADVANTAGE AUSTRIA.