Turn of the tide

Expo re­veals head­way and hur­dles in China

Herald Sun - - BUSINESS -

THE multi­bil­lion-dol­lar deals done at the China In­ter­na­tional Im­port Expo in Shang­hai this week show both how the na­tion is open­ing up and what bar­ri­ers still re­main.

The har­vest from the first expo will bol­ster Pres­i­dent Xi Jin­ping’s pledge to con­tinue re­lax­ing ac­cess to the world’s largest pool of con­sumers.

That’s un­der­scored by the 350 or so deals signed by firms among the 3600 ex­hibitors, span­ning from Ger­man in­dus­trial gi­ant Siemens to oil ma­jor Saudi Aramco.

At the same time, in­ter­views with dozens of ex­ec­u­tives try­ing to break into or ex­pand in China, such as a Cana­dian maker of air pu­ri­fiers or a Ger­man man­u­fac­turer of auto elec­tron­ics, de­tail the huge va­ri­ety of in­dus­try-spe­cific bar­ri­ers that have to be ne­go­ti­ated to gain that prize. Some in­dus­tries are still closed en­tirely.

While that’s an old bug­bear, it’s the threat of what for­mer US trea­sury sec­re­tary Hank Paul­son this week called a new Cold War be­tween the world’s two big­gest economies that makes Mr Xi’s fol­low-through on his new pledge all the more closely watched.

“What we want are con­crete ac­tions and a con­crete timetable of re­form,” Euro­pean Union Cham­ber of Com­merce Shang­hai chair­man Carlo Diego D’An­drea said fol­low­ing Mr Xi’s open­ing speech.

More than 350 deals were an­nounced dur­ing the expo, which ran from No­vem­ber 5 to 8, with the ma­jor­ity com­ing in the en­ergy sec­tor.

The big­gest batch was Sinopec’s $US45.6 bil­lion ($62.8 bil­lion) sign­ing of im­port con­tracts with nearly 50 com­pa­nies for oil and chem­i­cal prod­ucts, among oth­ers.

Gov­ern­ment en­ter­prises in en­ergy, ship­build­ing, steel­mak­ing, cars and other sec­tors dom­i­nated the pur­chas­ing, as Bei­jing used its po­lit­i­cal mus­cle in ser­vice of Mr Xi’s ini­tia­tive.

The role of the state is at the core of the dis­con­tent with China’s eco­nomic pol­icy that has led to the cur­rent stand­off with the US.

The role of state-owned en­ter­prises is fa­mil­iar to Que­becbased In­dus­trie Orkan, a firm that made its first con­nec­tion with China at the height of the SARS out­break in 2003, when its sys­tems that al­lowed hos­pi­tals to quickly clean the air in rooms were used.

The firm now wanted to sell sys­tems di­rectly to Chi­nese hos­pi­tals, rep­re­sen­ta­tive Liu Hao said.

The tech­nol­ogy that Orkan com­mands, ac­cord­ing to Mr Liu, can re-pur­pose a com­mon hos­pi­tal room into a germ-free room ready for pro­ce­dures like cran­iotomy within two days.

The process of get­ting a li­cence to sell di­rectly in­volves cre­at­ing its own lo­cal ri­valry: ac­cord­ing to Mr Liu, Orkan first must sell some of its non­core tech­nol­ogy and prod­ucts to a Chi­nese state firm, then let the firm brand the prod­ucts.

In re­turn, the state firm ap­plies for two li­cences: one for it­self, one for Orkan.

“It’s an un­tapped mar­ket with tremen­dous po­ten­tial and we don’t mind shar­ing it with an­other com­pany if it gets us there,” Mr Liu said.

Shar­ing is a key part of an agree­ment signed on Tues­day by Florida-based Car­ni­val — the world’s largest cruise ship op­er­a­tor — Ital­ian ship builder Fin­cantieri and China State Ship­build­ing for the pur­chase or con­struc­tion of four cruise ships.

In or­der to help the Chi­nese ship­yard gain the ex­per­tise needed to build cruise ships, Car­ni­val’s long-time Ital­ian part­ner will li­cense its tech­nol­ogy to the lo­cal state firm, thereby aid­ing Car­ni­val’s quest to break into the mar­ket.

In other words, some com­pa­nies are glad to jump through what­ever hoops are nec­es­sary while wait­ing for de­liv­ery of re­form.

Mr Xi also pledged this week to ease re­stric­tions on for­eign own­er­ship in health­care and ed­u­ca­tion, with­out de­tail­ing fur­ther.

Pic­ture: AP

Ad­mir­ers of Ital­ian cruis­ers at the China In­ter­na­tional Im­port Expo in Shang­hai.

Newspapers in English

Newspapers from Australia

© PressReader. All rights reserved.