Tuesday, 17 August 2010
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Ni Hao to replace Ni Sa Bula in Chinese Hotel Investments in Fiji
NW: China's reach extends southward
16 August 2010
Nikkei Report
NKRP
English
© Copyright 2010. Nihon Keizai Shimbun, Inc. All rights reserved.
WATARU YOSHIDA
Staff writer
GUANGZHOU - A Chinese economic sphere of influence that extends southward from mainland China to the Indian Ocean is taking shape before the world's eyes. The trend is fueled in part by the push of Chinese products and Chinese companies into South Asia and Southeast Asia in a search for export markets that can sop up the overflow from the nation's enormous production capacity. Geopolitics are also in play, with the Chinese government using public- and private-sector companies to invest in infrastructure in the regional countries that surround its rival India.
Fifteen rental cell phones sit on display in a small shop on a tiny street in the old part of the Bangladeshi capital of Dhaka. The masses of people who make less than 5,000 taka ($72) per month and cannot afford to buy a phone can use one of these handsets to make calls for just 2 taka per minute. The shop is operated by a 22 year-old new college graduate and his brother. What makes their business possible is the availability of inexpensive cell phones made in China.
Whereas Nokia Corp. handsets cost more than 2,000 taka, one made by Chinese firms Huawei Technologies Co. or Zhong Xing Telecommunication Equipment Co. can be bought for less than 1,500 taka while the local knock-offs are even cheaper. Chinese handsets now boast a greater than 80% share of the Bangladesh market for new cell phones.
Between 2000 and 2009, China's overall exports to India, Pakistan and other markets of South Asia soared 11fold, and its exports to Association of Southeast Asian members grew sixfold. In theses regions, South Korean consumer goods makers have made steady gains by offering high-quality products at moderate prices. But by offering lower-priced goods their Chinese rivals have also found a way in.
Ambitious sales goal
China's auto industry is also expanding southward. "Our goal is to reach annual sales of 10,000 cars in Indonesia after three years," asserted a vice-president of Beiqi Foton Motor Co., which is part of the Beijing Automobile Works Co. group. Reaching that goal means expanding sales more than 50-fold, considering that the company sold fewer than 100 cars in Indonesia in the January-June period of this year.
Beiqi Foton plans to begin local assembly of a small car in Indonesia starting in 2011, using parts all made in China and shipped there by sea. The company's strategy is similar to the other Chinese automakers moving into Southeast Asia: a search for markets that can absorb the huge domestic inventories that are building up.
But low-priced goods are hardly alone in spreading southward to broaden China's economic sphere: Chinese tourists are also playing a part.
In the resort area of Nandi on the South Pacific island of Fiji, the help-wanted section of the local newspaper has ads for immediate openings for Chinese cooks and other hotel staff for the luxury SSS International Hotel (Fiji), slated to open this month. The hotel owner, China's Suzhou Youth Travel Service Co., is seeking workers for its Chinese restaurants. The hotel will offer a Chinese-style breakfast and have Chinese-speaking staff.
Southeast Asia traditionally has been extremely cautious about China, but the many companies operated by local Chinese that have spread throughout the region have helped to soften the sense of Chinese menace and helped to pilot China's advances there.
Enlist local players
Heilongjiang Beidahuang Seed Group, one of China's leading agricultural companies, is gearing up to market disease-resistant and flood-tolerant varieties of hybrid rice in the Philippines. The group wanted to minimize criticism of foreign involvement in such an essential staple of the people's diet, so for this business it has formed a joint venture with a local agribusiness firm operated by Antonio Tiu, a Chinese resident of the Philippines.
BYD Auto Co. is taking a similar strategy in Malaysia, where it has teamed up with Berjaya Corp. Bhd. to build an assembly plant for small cars in Kuala Lumpur. The government of Malaysia has stopped issuing licenses to manufacture small cars in the country, but Berjaya is an influential company and BYD Auto hopes that this company owned by a Chinese resident can wrangle out an exception.
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