Overseas Chinese Investment in China

Wang Fang

Overseas Chinese businesspeople as witnesses and beneficiaries of Chinas reform and opening-up.

“Overseas Chinese businesspeople have become a vital force in Chinas reform and opening-up as well as economic development，” declared Wang Huiyao， President of the Center for China & Globalization （CCG） and member of the Overseas Experts Advisory Committee of the Overseas Chinese Affairs Office of the State Council. Wang believes that this unique group has made key contributions to Chinas modernization drive as witnesses and beneficiaries of reform and opening-up.

Over the last 40 years， overseas Chinese businesspeople have played a crucial role in the countrys impressive growth. As early as the initial stage of Chinas reform and opening-up， they took an active part in Chinas economic development with not only investment but also contributing advanced technology and experience.

‘First Bucket of Gold

Before 1978， the Chinese people took pride in the governments financial philosophy of avoiding both domestic debt and foreign loans. With the reform and opening-up， China began to utilize foreign investment in its economic development.

During a meeting with industrial and commercial leaders in January 1979， Deng Xiaoping said： “Now， it is necessary to develop the economy in many ways. For example， we can utilize foreign funds and technology. In order to absorb foreign capital， we may either use compensatory trade or establish Sino-foreign joint ventures， beginning with enterprises where the turnover of capital is quick.” From then on， China took new steps to attract foreign investment.

On July 1， 1979， the Law on Sino-foreign Equity Joint Ventures was promulgated， which created an alluring environment for foreign investors. At the time， China had just opened its door and urgently needed considerable funds to develop its economy. However， foreign investment did not arrive automatically. Many foreign investors were skeptical of the Chinese market and most preferred to wait and see.

In 1984， Chinese state leaders decided to build a state-of-the-art world trade center. But where would the money come from？ Western consortia offered to invest， but with harsh conditions attached， which the Chinese government rejected. At that juncture， Robert Kuok Hock Nien， the wealthiest business magnate in Malaysia， offered to help. In 1985， he invested US$530 million in the joint venture of China World Trade Center—Chinas first central business hub since reform and opening-up， which has since remained a landmark in the Chinese capital.

As the first Malaysian entrepreneur of Chinese origin to invest in the Chinese mainland， Kuok has continued with his investment since the 1980s. His business interests range from Shangri-La Hotels and Resorts to property development， vegetable oil （Gold Arowana） and everything in between. His gross investment in China reached US$5 billion， with projects all over the country.

As he participated in Chinas reform and opening-up， Kuok also enthusiastically engaged in public welfare undertakings to provide financial assistance to poverty-stricken students. Deng Xiaoping once spoke highly of him as a mentor for the younger generation， just like himself. In December 2012， Kuok received a Lifetime Achievement Award for Economic Person of the Year from China Central Television.

“Overseas Chinese investment is a very special and important part of foreign investment for China， which has driven Chinas economic development，” opined Ma Yu， director of the Institute of Overseas Investment and Economic Cooperation， Chinese Academy of International Trade and Economic Cooperation. Ma believes that the investment from overseas Chinese has been crucial for Chinas development over the last 40 years.

Policy Dividends

In the 1990s， with the continuation of reform and opening-up， especially after Deng Xiaopings inspection tour of southern China in 1992， an increasing number of foreign investors saw the benefits of Chinas policy of further opening up the market and made a big push into the Chinese market.

Parkson Group was one of them. Of all the investors from ASEAN countries， Parkson was one of the most famous brands. A retail subsidiary of the Golden Lion Group of Malaysia， Parkson came to China in 1994 as the first foreign-funded department store， which made a big impact on Chinas retail industry.

In fact， the Golden Lion Group began to import steel and related raw materials from China in 1979. It was one of the first Malaysian enterprises to respond to Chinas reform and opening-up. Dasri Zhong Ting， executive director and chairman of the Golden Lion Group and Parkson Retail Group， had his own ideas about the Chinese market.

“In 1986， I visited China on a fact-finding tour，” said Dasri. “I found out that China was having reservations about foreign investment， so I decided to wait and see.” He waited for six years untill 1992 when China began to open wider to the outside world. “After Dengs tour of southern China， I visited China again before investing big in 1993.”

Although Golden Lion Group entered the Chinese market later than many other investors， it never lagged behind. It immediately came to the forefront， with an aggregate investment of over US$900 million in automobile， tire， motorcycle and retail industries. Parkson has become one of the largest retail chains in China. The MPVs produced by Anhui Jianghuai Automobile （JAC）， its joint venture with China， rank first in sales in China.

Another overseas Chinese businessman who seized the opportunity as Dasri did was Carlos Chan， a Philippine tycoon nicknamed Mr. Oishi. As chairman of Liwayway Holdings Company， Chan saw promising opportunities in the Chinese market after Dengs southern China tour of 1992. In 1993， he introduced Oishi snacks into China， which gradually grew into a booming business.

“At the initial stage of reform and opening-up， foreign-invested enterprises could only sell 20 percent of their products in the local market， while the other 80 percent had to be exported，” Carlos explained， “After 1992， all products could be sold in the Chinese market.” Carlos and other investors were quite happy with this major move.

At the beginning of the 1990s， foods sold in China were packed in transparent plastic bags. Carlos introduced new design culture and food packaging technology into China. He innovated management to promote harmonious labor relations and give workers a say in factory operation. In his view， overseas investors have to adapt to Chinese culture and customs. Its more important to manage the work force than managing the capital.

Oishi has long remained a popular snacks brand in China. At present， Liwayway operates 15 factories with more than 1，000 distributors across China. Alongside snacks such as chips， candy and drinks， the company also produces packaging material.

Carlos is also the Presidential Special Envoy of the Philippines，devoted to economic， trade and cultural relations between the two countries. Thanks to his great efforts， two pairs of sister-province relationships have been established between Bohol and Jinangxi Province and Cavite and Anhui Province.

According to statistics， 60 million overseas Chinese and foreigners of Chinese origin live around the world with enterprise assets worth US$4 trillion. They have unique advantages with strong economic and technological strength， mature production and marketing networks， extensive political and business connections and the ability to communicate with both China and the rest of the world.

New Opportunities

“Chinas door of opening-up will not be closed and will only open even wider！” pledged Chinese President Xi Jinping at the opening of the Boao Forum for Asia Annual Conference 2018. He announced a series of new measures for further opening-up including significantly easing market access， creating a more attractive investment environment and taking initiatives to increase imports.

“In the new era， China has sent a new signal of further opening-up， which provides a platform for overseas Chinese businesspeople to better participate in Chinas new development，” commented Larry Chan， president of Liwayway （China） Company. He added that his company will seize every opportunity to promote its own transformation to new leapfrog progress.

“The Chinese economy is an important factor in the development and growth of overseas Chinese businesses， and the emergence of China has provided tremendous opportunities for overseas Chinese businesspeople，” commented CCG President Wang Yaohui.

“Inspired by the reform and opening-up policy， Royal Golden Eagle （RGE） Group began building factories in China，” recalled RGE Group Chairman Sukanto Tanoto. “We have not stopped investing ever since.” He believes that Chinas investment environment is becoming increasingly mature for overseas Chinese investors.

Sukanto has seized the policy dividend of reform and opening-up. Since 2000， he has invested more than US$50 billion in Chinas Shandong and Fujian provinces. His business interests range from pulp and paper to agro-industry and energy resources development.

Sukanto has enthusiastic confidence in the Chinese market with its sustained economic development and tremendous potential. “I think the Belt and Road Initiative has created a broad platform for overseas Chinese businesspeople，” he said. “We should find the courage to take pioneering steps to optimally play our part.”

After investing in China for over 20 years， Dasri of Golden Lion is placing even more attention on the Chinese market. “China has become a major player in international trade，” he noted. “If you can create a famous brand with your investment in China， you will definitely catch the train to the global market.”