Qingdao puts firms' expansion front and center

As the starting point for the eastern route of the 21st Maritime Silk Road, the coastal city of Qingdao in Shandong province has a prime position in the new Eurasia Land Bridge, and is a strategic pivot point for China's maritime cooperation.

According to official government statistics, Qingdao's outbound investment with countries along the Silk Road Economic Belt and the 21st Century Maritime Silk Road totaled $7.46 billion during the 12th Five-Year Plan period (2011-15). The amount was three times higher than its original goal of $1.8 billion.

The city's companies reported combined revenue of $15 billion for contracting overseas construction projects during the same period, compared with their original target of $5.5 billion.

In the first quarter of 2016, Qingdao's businesses registered 51 outbound investment projects with agreed investment from the Chinese side reaching $4.16 billion, a 528.6 percent increase from the previous year. To date, investment totaling $579 million has been put into place.

Since 2014, the city's government and business representatives have visited a number of countries and regions along the Belt and Road, including Pakistan, Cambodia, Poland, the Czech Republic, Sri Lanka, Seychelles and Mauritius.

In the spring of 2016, Qingdao Party chief Li Qun led a delegation that included leading local enterprises such as Qingdao Port, Tsingtao Brewery, Hisense, Haier, Qingdao Beverage Group and Aucma, to Hungary, Romania and Britain.

During the visits, more than 100 mutual investment agreements were reached.

Qingdao has also cooperated with the Export and Import Bank of China, using its Silk Road funds to help a number of local companies expand their business into the global market.

At present, overseas acquisitions have become a focus for Qingdao-based companies' cooperation with Belt and Road countries.

Zhang Xinqi, mayor of Qingdao, said an increasing number of Qingdao-based companies have grown into competitive multinational companies in recent years.

"As a result of their overseas operations, our companies have obtained new technology, new talent pools, and learned about new practices in different countries," he said.

Overseas operations

The Shandong Electric Power Construction Corporation III is building the S Alam Power Station, a 1,320 Megawatt supercritical coal plant in Bangladesh with a contract amount of $1.86 billion - the largest overseas project contracted by a Qingdao company.

In 2001, Haier built its first factory in Pakistan, and in 2006 it partnered with the country's Ruba Group to build the Pakistan Haier and Ruba Economic Zone in a bid to accelerate Chinese enterprises' overseas investments.

Haier is now the second-largest home appliance brand in Pakistan. Its sales revenue in the country reached $230 million in 2014.

Qingdao's CNQC Qingjian Group has established partnerships with Haier, Hisense, and a number of other Qingdao-based multinational companies to develop overseas industrial parks and manufacturing bases.

One such example is Hisense's Appliance Industrial Park in Atlantis, South Africa, which has already attracted 14 companies and generated a total annual revenue of $150 million. The project has created more than 3,000 jobs and contributed annual taxes of up to $50 million.

Since 2014, Qingdao's companies have built four overseas commerce and industry centers in Singapore, South Korea, Germany and the United States as platforms to help Qingdao-based companies invest and operate in foreign countries.

To date, Qingdao has established sister-city relationships and friendly ties with more than 30 cities and regions in 17 countries. The connections have laid a solid foundation for the city's companies to play an active role in the global economy.

In another development, Jimo, a county-level city in the north of Qingdao, has in recent years been accelerating its outbound investment, and this is especially true of its thriving private sector firms.

In March, the city's Jifa Group increased its investment in Cambodia by $2 million, and the exporting and manufacturing group Xueda invested $10 million to build a new plant in the country. In addition, Sentury Tire increased investment in its project in Thailand by $80 million, taking the total to $238 million, making it the largest Qingdao-funded manufacturing project in Thailand.

"By investing in countries along the Belt and Road, enterprises from Qingdao have not only lowered their production costs and enlarged their sales networks, but also created a large number of jobs in their investment destinations, thereby improving the livelihoods of local people," said Qingdao vice-mayor Liu Mingjun.

xiechuanjiao@chinadaily.com.cn

(China Daily 07/04/2016 page6)