B&R helps China firms to ex­pand in over­seas mar­kets

... and the Belt and Road Ini­tia­tive could be glob­ally trans­for­ma­tional.”

China Daily (Latin America Weekly) - - Business - By OUYANG SHIJIA ouyang­shi­jia@ chi­nadaily.com.cn

Af­ter years of de­vel­op­ment, the Belt and Road Ini­tia­tive is in­creas­ingly help­ing Chi­nese com­pa­nies to go global, be­sides driv­ing re­gional and global eco­nomic growth, said the top ex­ec­u­tive of Basilinna, a US-based strate­gic busi­ness con­sult­ing firm.

Deb­o­rah Lehr, CEO and found­ing part­ner of Basilinna and vice-chair­woman of The Paul­son In­sti­tute, a Chicago-based think tank and re­search in­sti­tu­tion, said Chi­nese com­pa­nies are now ramp­ing up their ef­forts to ex­pand over­seas.

“The Belt and Road Ini­tia­tive is a bril­liant strate­gic ini­tia­tive. Al­ready, we are see­ing changes tak­ing place as a re­sult of this ef­fort. Coun­tries like Saudi Ara­bia, the United Arab Emi­rates and Egypt are adjusting their own do­mes­tic strate­gic plans to re­flect the pri­or­i­ties of the ini­tia­tive, and to at­tract fi­nanc­ing for in­fra­struc­ture and other projects.”

Lehr noted that a whole in­dus­try is be­ing built around the ini­tia­tive’s needs and it is es­ti­mated to cre­ate a need for up to $2 tril­lion worth of in­fra­struc­ture fi­nanc­ing each year across the coun­tries and re­gions re­lat­ing to the Belt and Road Ini­tia­tive.

“In terms of a mar­ket op­por­tu­nity for fi­nan­cial in­sti­tu­tions, it’s huge,” she said. “It could re­ally cause a growth spurt. This growth is not just in those coun­tries that need it the most — across Africa, the Mid­dle East, Cen­tral Asia and South­east Asia — but also in China. And, in turn, it could have a pos­i­tive im­pact on global eco­nomic growth.”

Thanks to the ini­tia­tive, trade be­tween China and mar­kets par­tic­i­pat­ing in the Belt and Road Ini­tia­tive reached $786 bil­lion in the first three quar­ters last year, up 15 per­cent year-on-year.

Chi­nese busi­nesses di­rectly in­vested $9.6 bil­lion in economies tak­ing part in the ini­tia­tive, up al­most 30 per­cent year-on-year. And those economies in­vested $4.24 bil­lion in China dur­ing the same pe­riod, up 34 per­cent CEO and found­ing part­ner of Basilinna year-on-year.

“China is such a sig­nif­i­cant eco­nomic player, and the Belt and Road Ini­tia­tive could be glob­ally trans­for­ma­tional,” Lehr said.

Ac­cord­ing to her, as smal­land medium-sized com­pa­nies are much nim­bler, they can be more cre­ative in fi­nanc­ing and in the in­vested projects.

“In some cases, the Belt and Road Ini­tia­tive may ac­tu­ally be more ben­e­fi­cial for the pri­vate sec­tor,” she said. “For large in­fra­struc­ture projects, the big­gest is­sues are po­lit­i­cal risk and how par­tic­i­pants find mea­sures to mit­i­gate against for­eign ex­change risk. Much of the Belt and Road Ini­tia­tivere­lated in­vest­ment will be through very large in­fra­struc­ture projects that take years to com­plete, and tend to be in coun­tries that are less po­lit­i­cally sta­ble. Any fluc­tu­a­tions in for­eign ex­change can hurt the re­turns, or gov­ern­ment changes can have an im­pact.”

A re­cent re­port by US-head­quar­tered mo­bile an­a­lyt­ics com­pany App An­nie showed a grow­ing num­ber of Chi­nese com­pa­nies, par­tic­u­larly mo­bile app de­vel­op­ers, are tar­get­ing mar­kets linked to the Belt and Road Ini­tia­tive, and China’s in­flu­ence is ex­pected to grow in the next few years.

Lehr said as Chi­nese com­pa­nies con­tinue to ex­pand glob­ally, they also need to be more aware of cul­tural and reg­u­la­tory chal­lenges in the over­seas mar­kets.

“Over­com­ing th­ese mis­com­mu­ni­ca­tions is the most com­pli­cated part, and the busi­ness facts are much eas­ier to re­solve. And they also need to learn about the lo­cal reg­u­la­tory struc­ture,” she said.

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