Business

Leading a delegation comprising 150 senior executives from multinationals and 100 government officials, Harley Seyedin, President of American Chamber of Commerce in South China (AmCham South China), was pleased with the outcome of the China International Fair for Investment and Trade (CIFIT) held in Xiamen, southeast China's Fujian Province, on September 8-11.

"This year, more than $3 billion in deals was achieved by our members re-investing in new projects to expand in China and Chinese companies looking to invest in the United States," said Seyedin.

"Around 40 percent of investments by U.S. companies are made through AmCham South China. I attribute that success to our annual presence at the CIFIT. It has become a major platform for us to make investment decisions," said Seyedin. It's the 10th year that the AmCham South China has attended the CIFIT. At the 2011 CIFIT, members of AmCham South China signed deals worth an estimated $2 billion.

As the largest investment fair in the country, the CIFIT, held September 8-11 every year in Xiamen, is the ultimate matchmaker for investors and traders worldwide. Dubbed "a window to China and a platform for the world," the CIFIT, now in its 16th year, welcomed over 1,200 investors and investment institutions from around the world. At the 16th CIFIT, contracts for 355 projects were signed, with a total investment of $19.18 billion, among which foreign investment totaled $15.42 billion.

During a keynote address at the International Investment Forum 2012, which coincided with the opening of the 16th CIFIT, Chinese State Councilor Ma Kai pledged that China would continue to expand its domestic consumption market, open more industries and regions to foreign companies, optimize the investment environment and improve the quality in foreign capital utilization.

Confidence in China

Amid a sluggish global economic recovery, foreign direct investment (FDI) to developing countries has increased by a record high of 11 percent in 2011, according to the World Investment Report 2012 released in July by the United Nations Conference on Trade and Development (UNCTAD). The report also predicts that FDI inflow to developing countries will enjoy a substantial increase in the upcoming three years.

"It's a trend to see an increasing flow of global FDI into developing nations, which have become a new driving force in spurring the growth of the global market," said Gao Hucheng, Vice Minister of Commerce, during the International Investment Forum 2012.

China, the world's largest developing country, is still a hotspot for global investment. FDI in China reached a historic high of $124 billion in 2011, ranking second in the world after the United States, according to the report.

China is the most favorable investment destination of multinationals, according to a survey conducted by UNCTAD. Multinationals choose to invest in China because they want to be closer to the immense market.

In 2003, less than 23 percent of U.S. companies sold their products in the Chinese market while a majority of them utilized cheap labor and energy in China to produce exported products. In 2012, the figures have reversed. Over 71 percent of U.S. companies are offering products and business services to the Chinese market that are not for export, according to a survey conducted by the AmCham South China.

Air Products and Chemicals, Inc., an AmCham South China member and a Fortune 500 company, signed a contract at the 16th CIFIT to invest $300 million in Jiangyin Chemical Park in Fuqing of Fujian and $400 million in Zhangzhou, another city in the province. This is an addition to a $300 million investment deal in Shaanxi Province signed by Air Products in June.

"Air Products has been doing business in the Chinese market for 25 years," said Matthew Mao, Vice President of Air Products China. "In the first 20 years, we invested 5 billion yuan ($793.65 million) and another 10 billion yuan ($1.59 billion) in the last five years. That's a testimony of the impact of CIFIT."

On September 4, Amway, an American direct-selling multinational and a member of the AmCham South China, announced that it would invest 667 million yuan ($105.25 million) to establish a facility to produce nutrition supplement products in Guangzhou, Guangdong Province and a botanical research center in Wuxi, Jiangsu Province. The center will conduct R&D to combine traditional Chinese medicine with cutting-edge research techniques to create a wide range of products for the international market.

China is Amway's largest market. "The 667-million-yuan ($105.25 million) investment will focus on improving production ability and R&D to forge a solid foundation for our sustainable and long-term development in the Chinese market," said Yan Zhirong, President of Amway Greater China.

Due to rising labor costs and limited land resources in China, some multinationals chose to relocate their factories to Southeast Asian countries where the cost is lower. But Roland Decorvet, Chairman of Nestle S.A. Greater China, said that Nestle has never considered relocation.

"We never move factories just because labor cost increases. Now we are focusing on China and there will be much more factories in China for its 1.3 billion population. Our market is not 1.3 billion people, but 1.3 billion stomachs," he said.

In September 2011, the Swiss-based food giant acquired a 60-percent stake of Yinlu Food Group, a Xiamen-based private food company known for its ready-to-drink peanut milk and ready-to-eat canned rice porridge.

"China has very good development in almost every aspect," said Decorvet. "Nestle is quite optimistic of the Chinese market." Despite the slowdown of economic growth in the country, the sales volume from January to August has increased and Nestle China remains profitable, said Decorvet.

In the next three to five years, the sales volume of Nestle will reach $10 billion in the Chinese market and China will become Nestle's second largest market. Decorvet said that he hopes China will become Nestle's largest market one day.

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