China Watch Blog

China Watch Blog has learnt that China has bucked international trends in both outbound and inward investment, and now ranks as the fifth largest global investor in outbound direct investment (ODI) with a total volume of $56.5 billion, compared to a ranking of 12th in 2008, the Ministry of Commerce said on Sunday.

On top of this, foreign direct investment (FDI) this year was set to “surpass $100 billion”, compared to $90 billion last year, ministry officials predicted.

Globally, foreign investment decreased by almost 40 percent last year amid the financial downturn and is expected to show only marginal growth this year, according to a China Daily report.

The growth in both outbound investment from, and inbound investment to, China reflects the nation’s rising economic power and attractiveness as an investment destination.

The ministry made the announcements during a press conference held in Xiamen on the upcoming United Nations Conference on Trade and Development (UNCTAD) World Investment Forum and the 14th China International Fair for Investment and Trade. Both forums will start on Tuesday.

China Watch Blog picked up this news from The Times of India which reported that China is now ready to permit foreign companies to invest in local newspapers and magazines, provided they do not interfere with the editorial policy, Liu Binjie, minister for general administration of press & publication, said.

Chinese media groups will also be encouraged to extend their reach across the world, he was quoted as saying in a Xinhua report. “You can only invest in the financial operations of the newspapers. We have been encouraging the separation of the news reporting and business operations. Foreign investors can only invest in the business operation functions,” Liu said at a press conference. “A US media group has already invested in a Chinese computer magazine, he added.

The minister disclosed plans to bring about mergers and acquisitions in the Chinese media industry with the purpose of producing some international giants with worldwide reach.

Xinhua news agency is set to become an international media player, he said. The state-run agency is being encouraged to establish bureaus across the world to improve original reporting of international affairs, instead of depending on foreign sources for news stories.

“The government is encouraging media companies to restructure their management and list in stock markets,” Liu said. He said that 41 Chinese media companies, including the Beijing Youth Daily, are listed in the stock market, having a total market value of 290 billion Yuan ($43 billion).

The minister tried to counter the general view that the entire media industry in China is directly or indirectly owned by the government. He said there were 100,000 privately owned media companies in the country.

China Watch Blog has picked up an article which says that last December, the State Council  pointed out foreign enterprises “were encouraged to participate in mergers and acquisitions of State-owned enterprises.”

The most striking is the new foreign direct investment development guidelines launched this April, which include preferential policies for land use and tax. But many international enterprises are still worried the government is setting the bar higher for foreign investment and encouraging these entities to target the renewable energy, high technology and service industries in central and western areas of the country.

“This is a result of the transformation of the economic development mode with China and foreign investors need to do more research on China and try to match their commercial focus on those changes,” an official was quoted as saying by a People’s Daily report.

China Watch Blog was looking for criteria for good investment, and yours truly found this website – http://www.whatithinkabout.com/how-to-find-a-good-investment/ – which gives a couple of tips.

The author says “Clearly, the best alternative is to invest in either your own business, or someone else’s business that you understand. So the question becomes, “How exactly do we go about finding a company with a good business plan?”

Well, we can use the guidelines from my coming up with business ideas article. Afterall, if it’s a good business idea, and someone else is already doing it, might as well just join them! Here are the things to look for:

Fills a Need – Make sure that the business actually does something that someone will always want. For example, a business dedicated to bringing you the best housing, or a business that supplies people with books, is a solid foundation. A business that tells you to send them a dollar and pass the letter on is not. Any sort of business which doesn’t fill an actual need like multi level marketing (MLM) schemes are bound to fail. The more the need being filled matters, the more solid your business foundation. For example, people are fine without MLM books; people aren’t fine without food.

Is Run Well – Does the CEO sound like he sits on his ass all day and drinks beer? Is management in it to make a quick buck for themselves, at YOUR expense? Find out about the people running the business. Make sure that they actually care about filling the need in part 1. Just remember, if the business isn’t filling the need, it’ll disappear.

Has a High Barrier of Entry – The business should be hard to replicate. If it ends up making a lot of money and it’s easy to duplicate, pretty soon, there will be thousands of businesses just like it! People aren’t dumb – if they’re making their 8% in bonds and they see you’re making 200% with your business, they’re gonna come. This is where the branding of the company, and quality of the product becomes of paramount importance (see how much money is integrity worth?). If people trust the company, and the product is working just fine for them, it’ll be awfully hard to get them to switch. This is an interesting situation which I like to call the gap concept.

Is Underpriced – Let’s face it. We want to make money, so we’re looking for something cheap. Now, that doesn’t mean we’re ripping the other people off. It’s cheap for a reason. For example, if it’s a private business, the owner may need money to expand, or if it’s public, people may perceive the company to be very risky or unsuccessful for whatever reason. In that case, by putting your money in, you’re actually giving it your vote of confidence and making it slightly more expensive.

Of course, the more promising you think the business is, the more you can pay for it. Just keep in mind though that there’s potential everywhere while good results are hard to come by.

While there are probably other things to look out for, these 4 are by far the most important. If you just follow these 4 tips, you should be well on your way to finding a good, safe business to invest in!

Probably because of the global economic crisis since mid-2008, investors are just looking for any good excuse to invest. Well the opportunity has arrived apparently.

Taiwan Economic News reported that prospects generated by the imminent signing of the ECFA (economic cooperation framework agreement) by Taiwan and China has sparked China-bound investments by firms on the Taiwan Stock Exchange (TSEC) and Over-the-counter Securities Market (OTC).

The cumulative investment totals US$30.43 billion at the end of the first quarter and the amount is expected to exceed US$31.05 billion by the year-end, according to statistics compiled by the Cabinet-level Financial Supervisory Commission (FSC).

FSC figures show the inward-remittance-to-cumulative-investment ratio hit a historic-high of 9.49% at the end of last year, then declined to 9.12% at the end of the first quarter of this year, to which A FSC official attributes to faster growth in investments.

K.M. Wu, secretary general of the FSC`s Securities and Futures Bureau, says the China-bound investments totaled US$30.43 billion as of the end of the first quarter, rising US$1.47 billion from the end of last year. Investors posting the largest increases in investments are from TSEC-listed computers and peripherals sector and OTC-listed electronic components sector.

Transport logistics professionals should take note of this. That is where your business is going to come from. Send out your marketing people to talk to these types.

The FSC tallies show the number of China-bound investing firms totaled 939 as of the end of the first quarter, dropping two from a year earlier, to which Wu attribute closures of firms investing in China in the first quarter.

Taiwan`s cumulative overseas investments, excluding that in China, totaled US$59.09 billion in the first quarter, the largest amounts of which came from investors in the computers, peripherals and electronic components sectors.

Taiwan has approved 28 China-bound investment applications totalling US$870 million in March, surging 257% over last year’s , according to the Investment Commission under the Ministry of Economic Affairs (MOEA).  In contrast only one Taiwan-bound investment project was launched by a mainlander, valued at US$262,000, in the same month. In the first two months Taiwan saw China-bound investments reach US$550 million and US$820 million, respectively, with annualized rise of 95% for the former and 228% for the latter. Including that in March, then the cumulative investment totals US$2.24 billion, surging 188% from last year`s corresponding value. MOEA officials say that the sharp growth in China-bound investment this year is mainly due to the low reference of last year, when many Taiwanese enterprises were impacted by the global downturn. Whatever they say, China Watch Blog notes that Taiwan money is pouring into Mainland China, much much more than last year. The gradually recovering global economy has boosted the need to expand operations in China, hence the rising China-bound investments. Taiwan has since June 2009 begun to allow mainlanders to invest in Taiwan, but has so far met little interest, with, as of the end of March, incoming investment from China totaling only US$68.93 million, far lower than official expectations. This spells opportunities for transport logistics professionals without a doubt.