Turn of the tide
Expo reveals headway and hurdles in China
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.
Admirers of Italian cruisers at the China International Import Expo in Shanghai.