China's president has been traveling the world to promote not just Chinese products but Chinese-run factories and big construction projects. This follows decades in which Western companies were the ones setting up shop in China to build up its infrastructure and produce goods with skilled, cheap labor.
But now China, with over 30 years of experience as an export manufacturer, is using that knowledge to develop its own markets and operations in other countries. The quality of its merchandise has also improved as the Chinese learn how Western companies make things.
"This is where the Chinese companies are trying to work hard at -- against the perception they're there just because they're cheap," said Song Seng Wun, economist in the private banking unit of CIMB in Singapore.
China's growing status is a big blow to Taiwan and South Korea, which have thrived for years on the idea that they could make the same goods better than China and charge more.
Still, the image of China as a maker of cheap, shoddy products persists. That could hurt China as it bids for high-value contracts such as overseas bullet trains, economists say. But they expect the perception to ease longer term.
India and Southeast Asia are already snapping up smartphones made by Chinese companies Lenovo and ZTE . And Haier Electronics boasts 89% of the overseas market for made-in-China household appliances.
The government is selling China abroad while its own market has been been hurt by timid consumers and waning economic growth. That has motivated China to promote itself harder than other countries.
For example, the Beijing-based Asian Infrastructure Investment Bank and the government's belt-and-road initiative offer unusual channels to move capital outside the border, especially to less developed places that need development help.
A Chinese contractor would be better equipped than local peers in less developed countries to install a mobile broadband system, for example. Giant service provider China Telecom is reportedly set to bid on a mobile broadband project in Mexico.
Chinese firms already operate mines in Africa, own golf courses in the United States and plan to build infrastructure in the United Kingdom.
"I don't see any reason they won't be successful. In that game, effort is probably more than half the battle," said Tim Condon, Singapore-based head of research for Asia at ING Financial Markets. "They want to be in the game, and they're making that a policy."
Offshore foreign investment rose from just a few billion dollars in in 2006 to $102.9 billion last year, conjuring up comparisons to the global push by Japanese firms in the 1980s. The figure rose another 16.3% in the first 10 months of this year. China's own economy is on track for a slip to 6.5% annual economic growth through 2020.
Chinese firms with missions abroad also might tap China Merchants Bank or Bank of China for financing. And they could put their people on the international flights of China Southern Airlines.
President Xi's visits also should increase Chinese influence in international organizations, a boon to business that's harder for other countries to get without China's huge economic scale. Xi attended international leadership forums this month in Turkey and the Philippines following a visit to the United Kingdom and travel to the United States.
The International Monetary Fund's staff, for instance, has recommended the Chinese yuan join the IMF's $204.1 billion basket of Special Drawing Rights currencies, making the yuan exchangeable as a freely usable unit.
"Trade deals and partnerships build trust at a micro level," said James Berkeley, managing director of the London-based management advisory service Ellice Consulting. Eventually, he said, politicians in the United Kingdom will "push the argument for greater China inclusion in macro decision-making bodies."
No comments:
Post a Comment