China’s impact as a global investor; the Sting reports live from World Economic Forum 2015 in Davos

China’s impact as a global investor. World Economic Forum 2015, Davos (WEF, 21/01/2015)

The Sting continues its exclusive live coverage from the World Economic Forum 2015 in Davos with a critical piece on China. Yesterday afternoon all the panelists took their seats to participate in what was to become a fresh revealing dialogue on Chinese investment around the globe.

The panelists of the session were Mr Cai Jin-Yong, Executive Vice-President and CEO of International Finance Corporation (IFC), Mr Davies Rob, Minister of Trade and Industry of South Africa, Mr Diamond Bob, Founder and CEO of Atlas Merchant Capital LLC, Mrs Dong Mingzhu, Chairperson and President of Gree Electric Apliances, Mr Gonzalez Diaz Francisco, CEO of ProMexico and last, but not least, Mr Lin Justin, Professor at Peking University. The session was moderated by Mrs Hu Shuli, Editor-in-Chief of Caixin Media, the Chinese media that sponsored the session.

The main topic of the discussion was the massive Chinese investment equivalent to 1,5 trillion dollars that is being diffused in the next years in markets around the globe. An interesting discussion then was focused on the estimation of the impact that this investment will have on the developing and developed world, showcasing the Chinese and the global point of view. The topic is considered of utmost relevance for the global state of the world.

First, it was pointed out that China is going through a major change in the past few years. From a market focusing mainly on attracting foreign capital and investment, now more and more Chinese companies are becoming export minded and they prospect investment in various markets around the globe. Further, the status quo of the past, which poses China as a major player specialised only in raw materials and minerals, has long gone. Now China is catching up with the trends of the global market and is shooting in a successful manner at manufacturing and infrastructure.

All the panelists agreed that there has been a substantial turn of the Chinese economy recently towards high quality. The President of Gree, big international Chinese company, made a very relevant quote on this one, stating that the world’s public opinion has mistakenly linked the Chinese product with poor quality standard. For Mrs Dong it is the duty of companies like hers to contemplate with that and build trust towards the global consumer with products of exceptional and reliable value. Moreover, Gree, one of the best representatives of China’s export manifesto, has already substantial experience in various export markets. Mrs Dong shared with the audience and the world her big success story in other markets, where this Chinese company is selling its brand and provides significant added value to its customers. Gree is not a me-too product and certainly does not plan to be one.

Going a step further, the panelists, right after, started discussing the impact and challenges of the gigantic wave of Chinese investment fund that is flooding the global market. Professor Lin emphasised on the fact that China is coming through an industrial transformation today. In principle it is hard for big Chinese companies that are very successful in the mainland to go abroad and adjust to challenges. However, it is happening more and more lately. Chinese companies need to adjust and localise their products and services, in order to have success in the local market, the Professor underlines. What is more, Chinese companies need to adjust and localise their mindsets. Different markets mean different cultures, different legal systems, different climate, different world. And the most ambitious Chinese companies are called today to learn this lesson very well and very fast.

Despite the difficulty that Chinese companies face by default when they go abroad, it seems that the signs of this venture are more than positive. The panelists shared numerous examples where the Chinese entrepreneurial spirit has grown to a mature level so that it does not look primarily at the short term profit but at a long lasting strategy. Mr Bond, ex-CEO of Barclays, shared with us a good number of positive examples where Chinese investors are looking into financial products in a consistent manner. They partner with local banks and they increase their profitability fast. More so, they gain the most important value, the know-how and the experience, and they bring this back to homeland China, transforming it into talent and success.

It has to be mentioned here that one of the hot topics of the panel was Africa. Mr Rob Davies, Minister of Trade and Industry of South Africa, served his role as a discussion initiator on African investment. Apparently the Chinese interest has been great in the African continent lately. However the challenges are still high. Mr Davies explained to us that Africa, suffering the long post-colonialism effects, is a difficult territory to play ball. A massive continent of 54 different countries with different cultures, history, language and legal system as well as governance is not what one should call an easy market to prospect. However, the situation is allegedly changing for good and Mr Davies welcomes investors and particular Chinese investors to sit around the negotiation table and discuss.

Consequently, a new topic was naturally born in the panel and that was how the Chinese investor is to cope with all possible investment difficulties to face. Then all stakeholders, each from his one perspective, stressed that every investor and thus the Chinese investor, if he drives on the export road, or he strives to be an international/multinational company, he absolutely needs to embrace the “contributor’s mindset”. This is the biggest entrepreneurial wisdom passed in a few moments in only one session of the World Economic Forum 2015. It means that investment, and particularly Chinese investment in another market, needs to bring significant added value to the local society; be it jobs, be it growth, be it sustainability, be it level of health and so on.

The moment the Chinese investment will apply the “contributor’s mindset”, success will be booming. In all markets, particularly in Africa, governments seek betterment from foreign investment. It is often the easiest way. Thus the Chinese company is called to come up with the strategic offer to the local market of not only producing growth but also enhancing the lives of the people, enhancing the relations of the country with the world, improving the state of the country.

Grabbing this latter thought and being mobilised by the relevant headline of WEF, “improving the state of the world”, this is what China is at the end of the day called to do; improve the state of the world with its 1.5 trillion dollars investment. For that strategy and vision is needed and the Chinese entrepreneur seems to be adopting those values pretty fast.

The world will be better, or at least more affluent to be precise, if the massive Chinese investment can be properly managed and diffused with plan and contribution.-

Stay tuned at the European Sting, the only Brussels media that effectively broke the “Brussels bubble” and made it to Davos with live critical coverage of the most important sessions of the World Economic Forum 2015.