Danish Investments in China from 1980 to 2008

Transcription

1 Danish Investments in China from 198 to 28 May 29

2 I Summary... 2 II Danish Investments in China from 198 to Danish Investments in China 4 phases The 198s The size of Danish Investment Projects in China Conclusion Geographical distribution of Danish Investments in China North China Central China South China West China Conclusion Investments in China by 1 large Danish companies IFU, the Industrialization Fund for Developing Countries V Other Tables for Reference VI Comment on the data used for this report The report was worked out by the Trade Council of Denmark, Ministry of Foreign Affairs. Editor: Carsten Boyer Thøgersen, Head of Department, the China Task Force For comments cartho@um.dk Published by Danmarks Eksportråd, Udenrigsministeriet May 29 Danish Investments in China 198 to 28 1

3 From 198 to 28, Danish companies invested USD million in China, financing a total of 543 projects. Danish companies were early to invest in China. 85% of the value of all Danish investments in China was disbursed in two phases. From 1994 to 1996, 29% or almost one third of all investments were made. From 1997 to 23, the momentum of Danish investments in China discontinued with only 12.7% of total investments. From 24 to 28, 55% of all Danish investments in China were made. 37% of all Danish investments in China took place before year 2 and 63% from 2 to % of the total value of Danish investments in China was made by 1 Danish companies covering 5% of all investment projects. Thus, the remaining 95% investment projects covered 57.6% of the value of all investments. 3.5% of all Danish investments projects in China registered each an investment above USD 5 mio. 6% of all Danish investment projects in China registered each an investment of less than USD 25,. From 24 to 28, around 8% of the total invested value in China by Danish companies was made into the energy and food sectors. Tianjin municipality attracted 25% of all Danish investments in China. Thereby, Tianjin was the region in China which received the largest amount of Danish investments. Central China attracted 245 Danish investment projects or 46% of total Danish investments projects in China and 7 times more investment projects than Tianjin. In terms of value of investments Central China equalled Tianjin with 25% of the value of all Danish investments in China. After 2, West China was the region in China which in terms of value attracted the largest share 3% of Danish investments in China. Compared to other Chinese regions, South China kept the same proportion of investment projects as well as investment value before and after 2. Danish Investments in China 198 to 28 2

4 Million From 198 to 28, Danish investments in China totalled USD mio, financing a total number of 543 projects. Danish investments in China took place in four distinct phases. During the 198s, the first 1 Danish investments in China were made to 1996 saw the first large wave of Danish investments. From 1997 to 23, Danish investments were moderate. From 24 to 28, a second large wave of Danish investments in China took place. The very first Danish investment in China took place in 1985, followed by two large investments in In 1987, 1988 and 1989, 7 smaller investments were made. In all, Danish companies invested in 1 projects in China in the 198s with a total value of USD 87 mio. Hereof, two of the projects investments in real estate amounted to USD 74 mio or 85% of all Danish investments in China in the 198s. Table 1. Danish investments in China 198 to 28 in US Dollar s Investment in USD It was not until 1994, Danish investments in China took off for real. This coincided with a Chinese growth in GDP in 1994 of 14% 1. In the three years of 1994, 1995 and 1996, Danish companies invested USD 1,326 mio in 66 projects, amounting to 29% of all Danish investments in China in the period from 198 to See table 15 Danish Investments in China 198 to 28 3

5 Number The amount invested by Danish companies in China in 1994 covered 16 projects with a total value of USD 733 mio of which two projects invested by the same company in Tianjin and Suzhou made up USD 78 mio or 97% of the total Danish investments in China that year. Danish investments in China in 1995, covered 3 projects with a total value of USD 369 mio of which five projects located in Jiangsu, Tianjin, Jilin and Guangdong amounted to USD 313 mio or around 85% of the total Danish investments in China in In 1996, Danish investments in China covered 17 projects with a total investment value of USD 223 mio of which four projects located in Qingdao, Shanghai and Guangdong amounted to USD 181 mio or 81% of the total Danish investments in China in Table 2. Number of Danish investment projects in China 198 to s Number of investment projects From 1997 until 24, Danish companies invested in 135 projects in China. All projects were small or medium sized projects, except for one project in 21 located in Guangdong and amounting to USD 5 mio, thus making total Danish investments that year reaching a value of USD 169 mio. Another exception were two projects in 23 located in Xinjiang and Zhejiang and amounting to USD 57 mio making total Danish investments in China that year reaching USD 1 mio. Except for 21 and 23, Danish investments in China from 1997 to 24 had an annual average around USD 6 mio. Danish Investments in China 198 to 28 4

6 % of total number of projects (N=543) From 24 through 28, a new wave of Danish investments in China took place, amounting to a total of USD 2,53 mio or 55.4% of all Danish investments in China in the period from 198 to 28. The investments were distributed on a total of 297 projects or 55% of all Danish investment projects from 198 to 28. From 24 to 28, a number of 29 projects or 1% of all Danish investment projects during these five years had each an investment value of more than USD 6 mio, totalling USD 1,998.9 mio, equal to 79% of the total investment value in this period. 14 companies carried these 29 investment projects. Five of the companies invested more than USD 1 mio in the period. The 29 large investments projects from 24 to 28 mainly focused upon two sectors food processing and energy with a total investment value of respectively USD mio and USD mio or 44% and 34% of total investments in large projects from 24 to 28. The 3 rd largest sector the transportation sector had investments of USD 15 mio, equal to 7.5% of total investments in large projects, thus leaving only 14.5% for investment in other sectors. Four companies carried among them a total investment of USD 1,333 mio distributed on 11 investments and accounting for 53% of all investments in this period. From 24 to 28, the 29 largest projects had an average investment value of USD 69 mio, while the remaining 268 investment projects had an average investment value of around USD 2 mio. Table 3. Danish investments in China 198 to 28 by amount of investment per project < >1 USD Mio Looking at the size of Danish investments in China, 26.2 % of all projects registered an investment below USD 25, while 55.9% of all investments were below USD 1 mio. The number of investment projects above USD 5 mio was 19 projects or 3.5% of all investment projects. Danish Investments in China 198 to 28 5

7 From 198 to 28, almost 85% of the value of all investments was disbursed in the two periods from 1994 to 1996 and from 24 to 28, or within eight years. Compared to the total Foreign Direct Investments (FDI) in China, 2 Danish companies were early to invest in China from 1994 to From 1997 and until 24, however, this trend discontinued and only 12.7% of the total Danish investments in China was made. While FDI in China from 1997 to 24 stabilised between USD 4 and 5 billion annually with an upward trend, Danish investments in China remained small and did not until 24 regain the level of 1994 to In comparison, German investments in China developed differently 3. Danish companies invested earlier in China than German companies, but unlike Danish companies, German companies continued an almost gradual linear increase in their investments from 199 to 28. From 198 to 2, Danish companies invested in 16 projects in China of which 36% were located in North China, 35% in Central China, 18% in South China, 1% in West China and the remaining 1% in other regions of China. 4 Table 4. Distribution of Danish investment projects on geographical regions in China 198 to to to 28 Region Number Per cent Number Per cent North China 58 36% 12 31% Central China 56 35% % South China 28 18% 4 11% West China 1 1% 21 6% National 17 1% 13 3% Total 16 1% 383 1% 2 See table 13 3 See table 14 4The Report defines China s regions as follows (the definitions are slightly different from usual practise): North China is defined as the provinces and regions of Jilin, Liaoning, Hebei, Henan, Shandong and the municipalities of Beijing and Tianjin. Central China is defined as the provinces of Anhui, Jiangsu, Zhejiang, Jiangxi, Hubei and Shanghai Municipality. West China is defined as the provinces of Shaanxi, Inner Mongolia, Ningxia, Gansu, Qinghai, Tibet, Xinjiang, Sichuan, Yunnan and Chongqing Municipality. South China is defined as the provinces and regions of Guangdong, Fujian, Hainan and Guangxi. The term National covers investments registered with Chinese authorities without the name of a specific Chinese region. Chinese provinces not mentioned above, received no Danish investments from 198 to 28. Danish Investments in China 198 to 28 6

8 This pattern changed after 2. From 2 to 28, a number of 383 projects were invested of which 31% were located in North China, 49% in Central China, 11% in South China, 6% in West China and 3% in other Chinese areas. Table 5. Distribution of Danish investments on geographical regions in China 198 to 28 in value 198 to to 28 Region USD mio Per cent USD mio Per cent North China % % Central China % % South China % % West China.9 % % National % % Total 1, % 2, % Until 2, the majority of Danish business activities took place in North China in terms of value of investments, number of investment projects and location of Danish companies offices in China. 5 From 2, the number of Danish investment projects and Danish companies offices increased in Central China. However, the relative share of the value of Danish investments in Central China remained the same as before 2. Table 5 illustrates two large differences in the pattern of Danish investments in China before and after 2. Firstly, Danish investments in China almost doubled after 2 compared to investments from 198 to 2. Before 2, 36.7% of total Danish investments in China took place. After 2, 63.3% took place. Secondly, after 2, West China was the region in China that absorbed the largest amount of Danish investments. The decline of 3% of total Danish investments into China, which occurred in North China after 2 compared to the period from 198 to 2, showed up in West China after 2. Compared to other Chinese regions, South China kept the same proportion of investment projects as well as investment value before and after 2. From 198 to 28, North China had 178 investment projects of which one third was invested before 2 and two thirds after 2. In terms of value, investments were evenly divided between before and after 2. From 198 to 28, 33% of all Danish investment projects in China at a value of 39% of total Danish investments were located in North China. In terms of number of projects but not value Beijing attracted more investment projects than Tianjin. After Tianjin and Beijing, Shandong province was the most 5 See table 12 Danish Investments in China 198 to 28 7

9 preferred location in North China for Danish investments. Qingdao and Yantai received most of the Danish investments in Shandong. Most of the Danish investment projects in Liaoning province took place before 2. In 27, one particular large investment was made in Shenyang. Dalian was the other preferred location in Liaoning for Danish investments. Table 6. Regional distribution of Danish investments in China 198 to 28 Mio USD Number of projects Mio USD per Project in av. Region Tianjin 1, Jiangsu Inner Mongolia Fujian Guangdong Shanghai Tibet Shandong Zhejiang Beijing Anhui Liaoning Gansu Xinjiang Hebei Ningxia Qinghai Guangxi Henan Jilin Chongqing Hubei Yunnan 6,9 4 1,7 Hainan Shaanxi Sichuan Jiangxi National Total 4, Danish investments in North China were mainly located in Tianjin, which received around 25% of all Danish investments in terms of value between 198 and 28. This makes Tianjin the region in China which received the largest amount of Danish investments. Moreover, some of the single largest Danish investment projects in China were located in Tianjin. Danish Investments in China 198 to 28 8

10 From 198 to 28, 46% of all Danish investment projects in China at a value of 27% of total Danish investments were located in Central China. Table 7. Distribution of Danish Investments in China 198 to 28 on geographical regions in China in per cent of total value of investments West 19% National 3% North 39% South 12% Central 27% Around one fourth of investment projects in Central China was made before 2 and three fourths after 2. Added together Shanghai, Jiangsu, Zhejiang and Anhui attracted the same value of Danish investment as did Tianjin municipality around 25% of all Danish investments. Jiangsu was the province which registered the largest number of invested projects, in all 111 projects or around 2% of all Danish investment projects in China. Of these projects, 46 projects were located in Suzhou. Most of the investments in Suzhou were small and medium in value. 5 projects were above USD 3 mio, one project was USD 21 mio and the remaining 4 projects were less than USD 17 mio each. Before 2, cities in Jiangsu province such as Lianyungang, Zhanjiagang, Nanjing and Nantong saw a number of investments. From 1992 to 28, Wuxi, Changzhou and Qidong also had a relative large number of projects. Zhejiang province had 44 investment projects of which only 5 projects were invested before 2. The projects were primarily located in Hangzhou and Ningbo. Shanghai had 86 investment projects of which only 7 projects or 8% - were made before 2. This confirms the general observation that Danish companies only after 2 established business presence in Shanghai. Of the 86 Danish investment projects in Shanghai, three projects were above USD 3 mio. The remaining 83 project were less than USD 6 mio each. From 198 to 28, 12% of all Danish investment projects in China at a value of 11.5% of total Danish investments were located in South China. Danish Investments in China 198 to 28 9

11 The number of Danish investment projects in South China totalled 33 in Guangdong province, 14 projects each in Fujian province and Guangxi A.R. while 5 projects were located in Hainan province. Table 8. Geographical distribution of Danish investments and investment projects in China 198 to 28 in selected regions No. of Projects Jiangsu Shanghai Beijing Zhejiang Shandong Guangdong Tianjin Liaoning Fujian Gansu Tibet Inner Mongolia Value of investment in million USD 4 projects in Guangdong were above USD 3 mio, one project at USD 15 mio and 3 projects were between USD 5 mio and 1 mio. The remaining 25 projects were each below USD 5 mio. Several large projects were located in Xiamen, Fujian province of which the first project was established in Table 9. Distribution of Danish investments in China 198 to 28 on geographical regions in China in per cent of total number of projects South 12% National West 4% 5% North 33% Central 46% Danish Investments in China 198 to 28 1

12 In 1997, 6 smaller investments were made in Guangxi A.R. and in 25 again 5 smaller investments were made. One single investment in 21 made up 83% of all Danish investments in Guangxi. The 5 small investments in Hainan were all made in 1992 and From 198 to 28, 5% of all Danish investment projects in China at a value of 19% of total Danish investments in China were located in West China. After 2, West China registered 3% of total Danish investments in China. Except for one small investment in Shaanxi province no Danish investments in West China were made before 23. Moreover, all investment projects except for one large project in wind power in Inner Mongolia were all made into the food and beverage sectors. As for Danish investments in China from 198 to 28, Tianjin Municipality was in a league of its own, receiving 25% of all Danish investments. Around 75% of all Danish investments were located in coastal regions while 19% were located in West China. Danish investments in Mid China were few in number as well as small in value. After 2, West China was the Chinese region, which attracted the largest value of Danish investments in China. Table 9 lists the top ten Danish companies with the largest investments in China from 198 to 28, amounting to a total of USD 1,938 mio or 42.4% of total Danish investments in China from 198 to 28. Table 1. Danish investors with total of more than USD 1 mio Mio USD Company ranking Total 1,938 Danish Investments in China 198 to 28 11

13 IFU, the Industrialization Fund for Developing Countries, has operated in China since Over the years, IFU has supported 9 Danish industrial investment projects in China of which 38 projects are ongoing 6. Since 2, IFU has in particular focused on the huge potential of West China. Since 1987, IFU has invested DKK million in China and has been instrumental in facilitating investment of 8.4 times the amount of its own investment in total DKK 6,41.1 million. The projects of IFU are primarily driven by the interests of Danish Companies. Therefore, the list of IFU supported projects in China is wide in terms of its distribution on industrial sectors. The figures on IFU s investments in China cannot directly be compared to official Chinese figures because IFU for a number of projects invested through subsidiaries located in Hong Kong. China s statistical authorities register such investments as Hong Kong investments into China. 6 Based upon information from IFU Danish Investments in China 198 to 28 12

14 Number of company addresses Per cent of companies Table 11. Time of entry and establishment in Mainland China Before After 23 Entry Establishment Source: Trade Council of Denmark in China Table 12. Danish companies business addresses in China in 1994 and North China Central China South China Hong Kong South West China Source: Trade Council of Denmark in China 7 This table includes only entry and establishment in Mainland China. Entry is defined as start-up of regular business. Establishment is defined as set-up of a legal entity. Danish Investments in China 198 to 28 13

15 Million Billion Table 13. Foreign Direct Investments (FDI) in China 1984 to US Dollar Source: Ministry of Commerce, China Table 14. German FDI in China 199 to 26 in Euro Euro 8Source: Chinese Companies in Germany, Deloitte, Bertelsmannn Stiftung, 29 Danish Investments in China 198 to 28 14

16 DKK Million Per cent of GDP growth Table 15. Annual Growth of GDP in China 1978 to GDP Source: China s Statistical Bureau Table 16. Danish exports & imports to and from China between 199 and Exports Imports Source: Denmark s Statistical Bureau Danish Investments in China 198 to 28 15

17 The report is based upon official Chinese statistical figures from the Ministry of Commerce of the People s Republic of China. In this report Danish investments in China are defined as investments registered as transfers from Danish bank accounts to Chinese accounts in connection with the start up of a new project either a production facility, acquisition of a Chinese company or the establishment of a trading company. Re-investments in existing projects following the initial start-up investment in a project are usual not registered in the statistical material used for this report. Danish investments in China financed by Danish companies subsidiaries in other countries including Hong Kong are not included in this report. Until recently and still today, a number of Danish companies investing in China did so through a holding company registered in Hong Kong. In terms of legal procedures and transparency, an investment from a company in Hong Kong was often simpler. Because of the One Country Two Systems concept, the economies and statistics of Mainland China and Hong Kong are separate. Thus, Danish investments to Hong Kong although a part of China (One Country) are not included in official Chinese statistics (Two Systems). China s financial and legal system has seen much improvement over the last 3 years. Today, the advantage of using a Hong Kong subsidiary when investing in China is less obvious than before. The Statistical Bureau of Denmark registers figures on Danish investments in China differently than the Chinese authorities, e.g. including commercial credits. The figures of Danish investments in China used in this report are incomplete. Based upon general knowledge about Danish companies investments in China made public by the companies themselves, it is roughly estimated that the amount of Danish investments in China registered by the Chinese authorities may only account for ¾ of all Danish investments in China. Only a more comprehensive study than this one will be able to identify and analyse the Danish investments in China not accounted for in this report. However, it is the view that this report establishes a useful and first review of the volume of Danish investments in China and their distribution over time and by geographical region. 9 9Tables from The 25 Report on Danish Companies in China. See: Danish Investments in China 198 to 28 16