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China’s Investment in US


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The presentation was conducted by the senior VP of the Bank of China American Branches. The event was hosted by the Greater Cincinnati Chinese Chamber of Commerce.

The presentation was conducted by the senior VP of the Bank of China American Branches. The event was hosted by the Greater Cincinnati Chinese Chamber of Commerce.

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  • Take some time to learn about the audience… - Structure of BOC - Areas of responsibility Risk Management Framework What do you want to learn form this session?
  • Take some time to learn about the audience… - Structure of BOC - Areas of responsibility Risk Management Framework What do you want to learn form this session?
  • Transcript

    • 2. CONTENT
      • Bank of China
      • China General Chamber of Commerce-USA
      • Current Status of the Chinese Economy
      • China’s Outbound Investment
      • The Key Drivers Behind China’s Outbound Direct Investment
      • US – An Attractive Location to China’s FDI
      • New Regulatory Initiatives from the Chinese Government
      • Opportunities for the Ohio Tri State Region
    • 3.
      • 1. Bank of China
      • Bank of China’s businesses cover commercial banking, investment banking and insurance.
      • Bank of China was established in 1912.
      • In the middle of 2006, Bank of China offered its IPOs to both “A” shares and “H” shares markets.
      • The Bank has more than 600 overseas branches or subsidiaries in 29 countries and sub-regions.
      • On July 24, 2004, the Bank became the sole banking partner of Beijing 2008 Olympic Games.
      • In terms of tier one capital, Bank of China ranked 10 th among the world’s top 1,000 banks by U.K.’s “The Banker” magazine in 2008.
    • 4. 1. Bank of China
      • Bank of China has three branches in USA, two of which are in New York City and one is in LA, California. Its first U.S. branch, BOC New York Branch, was opened on November 16, 1981. And then Bank of China set up its New York Chinatown Branch and Los Angeles Branch in November 1985 and October 1988 respectively.
      • At the end of 1982, the Bank of China U.S. branches had total assets of $1.315 billion and pre-tax profit of $1.02 million. As of 2008, the two numbers had increased to $39.3 billion and $106 million respectively.
    • 5. 2. CGCC-USA
      • China General Chamber of Commerce-USA is a non-profit organization headquartered in Washington D.C. It has more than 500 members, and some of the key members include:
      • In New York and New Jersey: Bank of China New York Branch, Baosteel America Inc., Bau-lo Wooden Furniture, Inc., Minmetals Inc., Shanghai International Holding Corp. (America), Chinatex America Holding Corp, China Shipping (North America) Holding Co., Ltd., China Construction America, Inc., Ceroilfood (New York) Inc., CITIC Group Representative Office in New York, China Ocean Shipping Company America, Inc., Air China New York Office, China Petroleum & Chemical Corporation USA Representative Office, Pacific American Corp., and Waitex.
    • 6.
      • 2. CGCC-USA
      • In Washington D.C.: China telecom USA Corporation, Shanghai Construction Group (America) Company Limited, and Lenovo.
      • In Chicago: BYD America Corp, SAIC USA Inc., and Wanxiang America Corporation.
      • In Houston: Sinochem American Holdings, Inc., Huawei Technologies USA, China Real Estate Group North America Investment Co. , ZTE USA Inc., and PetroChina International (America) Inc.
      • In Los Angeles: China Aviation Oil Supply Corp., Unisun Multinational Inc., WISCO AMERICA, and China Interocean Transport Inc.
      • In San Francisco: Shanghai Hua Hong International (USA) Inc., China CYTS Tours (USA), Inc., Genertec America, Inc., ZPMC U.S.A., and, Inc.
    • 7. 3. Current Status of Chinese Economy
      • China’s economy saw a significant pick-up in 2Q09, as the nation’s GDP growth soared to 7.9% YoY in 2Q09, after rising 6.8% in 4Q08 and 6.1% in 1Q09. In the first half year of 2009, the GDP gained 7.1% YoY. Such a quick rebound demonstrates the remarkable effect of China’s stimulative fiscal policy and easing monetary policy. While other markets around the world have adopted various policies to ensure the normalcy of banking operations after the financial crisis, only China’s commercial banks have been capable of offering massive loans in an unprecedented manner.
      • Looking ahead, the sustainability of this recovery should come from the rebound of consumer sector and net exports and, hence, the rebalanced structure of the economy.
    • 8. 4. China’s Outbound Investment
      • China’s overseas direct investment started in 1978 and had remained very moderate growth through 2004.
      • By 2007, the annual volume of ODI (Overseas or Outbound Direct Investment) had grown to around $25 billion, and then doubled to $55.91 billion in 2008. Non-financial ODI was $41.86 billion in 2008, up 68.5% year on year and financial ODI $14.05 billion, up 741% year on year.
      • China’s ODI came from more than 8,500 domestic investors and their overseas corporate assets topped $1 trillion. Chinese overseas enterprises employed about 1.03 million people, including 455,000 overseas employees. Among the Chinese outbound investors, 50.2% were limited liability companies, 16.1% per were state-owned enterprises, and 9.4% were private companies.
    • 9. 5. Key Drivers behind China’s Outbound Direct Investment
      • Access to natural resources
      • Access to new markets
      • Financial investment / diversifications
      • Access to capabilities
      • Gaining scales
      • Access to financing
      • Government influence
      • CEO’s personal ambitions
      • Export of capabilities
    • 10. 6. US-An Attractive Location to China’s FDI
      • Investing in the U.S. has many advantages. The U.S. has more than 300 million people, a land mass of 3.7 million square miles, an economy larger than any other single country, and is the most important market for a global company. The American workforce ranks as one of the best educated, most productive and most innovative in the world. Based on the official estimates (source: China’s Ministry of Commerce), as of the end of June, 2009, the China’s ODI exceeded $310 million and maintain a high speed momentum.
      • In terms of industry distribution, wholesale, manufacturing (mainly chemicals and primary and fabricated metals), and other industries (agriculture, forestry, fishing, and hunting; mining; utilities; construction; transportation and warehousing; administration, support, and waste management; health care and social assistance; accommodation and food services; miscellaneous services) are three sectors that China’s FDI had concentrated in so far.
    • 11. 7. New Regulatory Initiatives from the Chinese Government
      • China’s “going abroad” policy was first announced in 1999 and has been ever since improved significantly.
      • The recent regulatory reforms have been gradually focusing on easing approval procedures, shifting responsibilities from central government to local agencies, and reducing approval time.
      • The Chinese government recently relaxes capital controls and broadens financing channels for the “going abroad” companies.
      • For instance, the State Administration of Foreign Exchange (SAFE) has announced that, from August 1, 2009, it would simplify the examination and approval procedures for domestic companies with overseas investment plans. Under the new rules, Chinese companies would be allowed to register the source of their foreign exchange financing after their investment overseas instead of obtaining approval beforehand.
    • 12. 8. Opportunities for the Ohio Tri State Region
      • All these important Chinese OFI trends and the above regulatory initiatives represent big opportunities for the businesses in the Ohio Tri State region.
      • Business owners who desire investment should take notes of all those changes. In my opinion, Chinese companies’ may be attracted by advanced technologies, low energy cost, richness in natural resources, convenient transportation, government incentive programs, and friendly investment environment.
    • 13. 8. Opportunities for the Ohio Tri State Region
      • An example of a prominent investment from China: WANXIANG
      • Wanxiang is headquartered in Elgin, Illinois. At the very beginning, Wanxiang went into the mid-west region by taking an equity interest in Rockford Powertrain Inc., a supplier of heavy-duty driveline components to U.S. off-road equipment manufacturers. Then Wanxiang successfully restructured the firm with new equity injection and brought the company’s operation back to profit. In the Chinese overseas business community, Wanxiang has been treated as a key business model for the China’s ODIs in the mid-west.
    • 14. 8. Opportunities for the Ohio Tri State Region
      • The regional investment banks and consulting firms can also brace for more business opportunities:
      • For instance, Chinese companies regularly seem to misjudge the political, labor, and environmental risks that the US business environments present. To avoid these problems, the companies usually have to build a better assessment of risk into their investment decisions. In dealing with these issues, Chinese companies, indeed, have many choices: they can engage third-party experts (such as law firms and public-relations agencies) that have a deep knowledge of the target’s local environment early in the evaluation process, or work with knowledgeable advisers or lawyers to accelerate a company’s effort to understand how risks should be managed.
    • 15. THANK YOU!