How to Invest in China

Introduction to China Investment Opportunities in 2012

Every businessman heard about attractive perspective to invest in China. GMG always try to analyze all tendencies in world investment opportunities. Our primary location in China gives us keys to provide clear and relevant reports about current business atmosphere.

Before making suggestion to invest in China, we would like to provide you with newest official information from public sources. We believe that when you’ll see full picture it is easier to make a right decision.

According to statistics of Investment Promotion Agency of MOFCOM: In January this year, the top ten nations and regions with investment in China (as per the actual input of foreign capital) are as follows: Hong Kong (USD6.357b), Japan (USD799m),  Singapore (USD646m),  Taiwan Province(USD490m), U.S.A. (USD342m), Swiss Confederation (USD250m), R.O.K.(USD159m), U.K.(USD93m), Malaysia (USD83m) and Holland (USD73m)

According to WORLD INVESTMENT REPORT 2012 by United Nations Conference on Trade And Development (UNCTAD) in the developing regions of East Asia and South-East Asia, Foreign Direct Investment (FDI) inflows reached new records, with total inflows amounting to $336 billion, accounting for 22 per cent of global inflows.

FDI flows to China also reached a record level of $124 billion, and flows to the services sector surpassed those to manufacturing for the first time. China continued to be in the top spot as investors’ preferred destination for FDI, according to UNCTAD’s World Investment Prospects Survey (WIPS).

Overall, as China continues to experience rising wages and production costs, the relative competitiveness of ASEAN countries in manufacturing is increasing.

According to statistics of Investment Promotion Agency of MOFCOM: In January this year, the top ten nations and regions with investment in China (as per the actual input of foreign capital) are as follows: Hong Kong (USD6.357b), Japan (USD799m),  Singapore (USD646m),  Taiwan Province(USD490m), U.S.A. (USD342m), Swiss Confederation (USD250m), R.O.K.(USD159m), U.K.(USD93m), Malaysia (USD83m) and Holland (USD73m)

In 2011, multinational companies invested around $420 billion in the E.U., $226.9 billion in the U.S. and $123.9 billion in China. India received around $31.5 billion in FDI, less than Russia ($52.8 billion) and Brazil ($66.6 billion).

Greenfield investment dominates, but M&As are on the rise.

Greenfield investment is the dominant mode of entry in East and South-East Asia, although the total amount of investment decreased slightly in 2011 to about $207 billion. In contrast, cross-border M&As sales in the region increased by about 24 per cent to $33 billion, driven by a surge in South-East Asia, where total M&A sales more than doubled, reaching $20 billion. Sales in East Asia dropped by one fourth, with a rise in M&As in China (up 77 per cent to $11 billion) cancelled out by a fall in those in Hong Kong, China (down 92 per cent to $1 billion).

In manufacturing, the major industries in which Greenfield investment took place were chemical products, electronics, automotive and metal and metal products in that order, while those most targeted for cross-border M&As were electronics and food and beverages. M&A sales also increased in services, contributing to a longer-term shift.

In China, FDI flows to services surpassed those to manufacturing for the first time as the result of a rise in flows to non-financial services and a slowdown of flows to manufacturing. FDI in finance is expected to grow as the country continues to open its financial markets,6 and as foreign banks, including HSBC (United Kingdom) and Citigroup (United States), expand their presence through both M&As and organic growth.

Why China is the top spot as investors’ preferred destination?

1. Huge internal market with possibility to the investor to diversify his/her portfolio.
2. Political stability in China and government friendly atmosphere to new investors that also proved by stable 9 % economic growth.
3. The Chinese currency Yuan is experiencing a positive trend in the currency appreciation market. Thus, the strengthening of Yuan during the inflationary cycle in comparison to dollar can give better chances of survival to an investor investing in this market.
4. TOP 500 companies successfully establish business here and continue expand their market with the targeting on Second and Third Tier Cities.
5. Susceptible environment for investors to purchase good stocks which are reliable.
6. The fastest transport system grooving county in the World.  China has a developed transport system: 80000km railway, 3.73 million kilometers highway, 152 airports. It is very easy for a passenger to travel from the North to the South, from the West to the East. Many high speed railway lines connecting Beijing with Tianjin, Beijing with Shanghai, Wuhan with Guangzhou, Zhengzhou with Xi’an, have been running since 2008.
7. High educated labor force. Around 6 million student graduated every year.
8. China has been named the third largest green energy market all over the world by the World Bank. The government of China has invested billion dollars in the clean energy industry. The promoting policies for using clean energy are implemented across country. Especially, the government of China will support a clean tech project economically.

What are the top industries for foreign investment:

• Infrastructure
• Farm, Forest, Herd and Fish
• Electronics and Communications
• Information Technology
• Light industry and Textile
• Oil and Chemical Industry
• Energy and Environmental Protection
• Bio-medicine
• Machinery Manufacturing
• Metallurgy
• Aviation and Aeronautics
• Foods and Beverages
• Services Trade