New opportunities brought about by new normal

Zhejiang Province on the eastern coasts has firmly seized the opportunity of economic globalization and took an active part in the division of labor among international industries, thus becoming an active international investment cooperation promoter and direct beneficiary. The overseas investment used from have-not to have, from small to big and from weak to strong, growing steadily in the total volume and the areas for investment constantly expanding and investment quality improving. What is more, under the downward pressure of the global economy, the province still registered a historical high for sixth years running in the use of overseas capital in 2015.

Sixth consecutive year high in using overseas capital

In 2015, the province strengthened attraction of overseas investors and provided better services for them and created clusters of overseas investment.

The province approved 1,778 overseas capital enterprises, with a total investment of 41.24 billion U.S. dollars and a contracted capital of 27.82 billion U.S. dollars and the total amount of overseas capital used was 16.96 billion U.S. dollars or 105.88 billion yuan, growing by 9.1 percent year-on-year according to calculation by Renminbi. The amount of contracted investment and the amount of overseas capital actually used increased by 14.0 percent and 7.4 percent, respectively. The amount of overseas capital used was the sixth consecutive year high.

By the end of 2015, the province had approved 55,905 overseas capital enterprises, with a total investment of 514.75 billion U.S. dollars, contracted overseas capital of 290.66 billion U.S. dollars and the total amount of overseas capital actually used reached 158.65 billion U.S. dollars.

The amount of capital invested in Zhejiang by the world top 500 doubled at the beginning of attracting overseas capital. The overseas capital is biased toward new and high technology projects. Many world top 500 have moved their R&D centers and regional headquarters to Zhejiang.

The Tokai Rubber Industries under the flag of the Sumitomo Electric has given a good appraisal of the government services. Head of Tokai Rubber’s general affairs department Liu Feng said: “The Zhejiang provincial government has offered highly efficient and pragmatic services. The reform of the administrative examination and approval has made the world top 500 settle in Zhejiang very fast. It is the “Zhejiang speed”. The development zones and other areas offered “waiter’ service”, asking for demand, conveying policies and helping solve difficulties so that overseas enterprises may adapt to the local conditions very quickly.”

Continental AG of Germany is very happy with the building of the major industries platform. Dajiangdong is Zhejiang’s auto industry cluster. By employing its industry advantages, it has built a full production chain. Once the related enterprises settled, including Continental AG, and began to produce, they would have a major part of products put on the local market.

New opportunities under new normal

The new opportunities created under new normal have injected renewed vigor into the interaction with the rest of the world.

1. Big opportunities in the capital market. Zhejiang has entered a new normal in “selecting overseas capital”. The province has a plan of using 500 billion U.S. dollars of overseas investment in five years. So it has to bias toward big investors and “chain type investors” at the best, toward medium- and high-end and high quality investment. The best choices are the world top 500, as their tentacles are long. They are the VIP in Zhejiang’s capital market under new normal in terms of both scale and quality.

2. Quick upgrading of demand structure. The per capita income of Zhejiang has been rising steadily and the consumption structure has been upgraded. With more money in the pocket, the people need more and better service products such as information, medical service, health, finance and culture. The world top 500 enjoy a big advantage in these areas.

Such opportunities manifest themselves not only in consumption but also in industries. Zhejiang has re-classified the industries into seven major categories: information, environmental protection, health, tourism, fashion, finance and high-end equipment. These industries have offered great opportunities for the world top 500.

3. Green development. The green development of Zhejiang, such as controlling water and air pollution and wastes, requires a huge amount of environmental protection equipment, technologies and services. Enterprises demand for large scaled, newer and highly efficient production equipment. The province has already on the move to “replace people with machines”.

The Zhejiang Provincial Department of Commerce and the British “Financial Time” jointly issued a “Report on Investment in China’s Zhejiang Province 2015”. The report is the result of a three-month directional study of 300 domestic and foreign capital enterprises and through visiting and on-line surveys, the report has found out their optimism of these enterprises about the current macroeconomic situation and investment. The report indicates that the confidence of overseas investors in China has recovered and with the economic transition, information, health and environmental protection have become a new trend for overseas investment.

The report also shows that the areas overseas investors intend to invest in: 17 percent in the information industry, 16 percent in consumption, 11 in low-end manufacturing, and 10 percent in high-end manufacturing, 7 percent in finance, 6 percent in health and 2 percent in environmental protection.

Johnson & Johnson China vice-president Jue Fei holds that with the transition and upgrading, the orientation of investment will change. Transnational corporations will cater to the ends of the local government and at the same time get substantial benefits from their input and innovations.

Zhejiang’s strength in attracting overseas investment

First of all, Zhejiang is situated in the most economically developed Yangtze River delta area, which is noted for the developed manufacturing, flourishing service industry and brisk consumption demand. Statistics show that Hangzhou is one of the cities with the highest investment return rate for both domestic and overseas investors. The province promises vitality, potential and fine development environment.

Secondly, Zhejiang is noted for its non-governmental businesses.  Zhejiang business people active on the economic arena have great insight and far sight, wisdom and courage in doing things, which are very attractive to overseas investors. After the first stage of cooperation with overseas investors, they would be anxious to upgrade their technologies and modern management. This will provide one of the great opportunities for foreign investors. Zhejiang businesses people were the earliest to attract overseas investment and start joint ventures. Now they are seeking to get a listing overseas and importing venture capital.

With the international capital flowing into more mature markets, an orderly market has become essential for attracting overseas capital. The province has over the years created even more convenient, fair and even just field. The province has also opened wide the channels for overseas investors to seize the green development opportunities, industrial opportunities and market opportunities in addition to a beautiful economical, living and innovation-friendly conditions.
　　
Lastly there is a big personnel pool. Many overseas investors used to like the low labor cost in China, but now, a personnel advantage is building up. The famous brand universities and schools represented by Zhejiang University have become the cradle of high-quality, overall and professional personnel. The province also has rich resources of business people, who have the courage and wisdom to blaze a new trail. They are the best partners for the world top 500.

Zhejiang Investment report shows that after adapting to the new normal of the Chinese economy, Chinese and overseas enterprises have buttressed their confidence in China’s macro economy. The report says that the confidence index of overseas investors in 2015 was 126.07 and that of investors in manufacturing was 126.17. The recovery of the confidence of overseas investors and the improvement in the government work efficiency all indicate to the optimistic income anticipation but not in the high-growth anticipation.  

The presidents of many big companies all live in China, especially in Shanghai and Beijing. Carl Wegner, CEO of the Global Financial Trading Department of Deutsche Bank said that overseas enterprises used to invest in the processing industries so as to produce and export. Now they have come for the market, regarding China as the biggest market.

The report points out that overseas investors also worry about the continuity of policies and economic stability and suggested more well-targeted objects and more accurate understanding of the orientation of development of the macro economy in attracting overseas investment. At present, overseas investors are not very clear about China’s emerging industries and therefore their investment is still going to the traditional manufacturing. It is, therefore, necessary for the government to make a big publicity of environmental protection and electronics and information industries and provide a well-targeted guide to overseas investors. （Contributed by Qu Lingyan）