THE MANILA TIMES BUSINESS FORUM

China sees inflow of more PH investment

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China may see the inflow of more investment from Philippine companies such as Jollibee and the SM Group in the coming years as the retailers have been actively pursuing expansion plans in the world’s biggest market even as the two governments continue to try to “overcome difficulties,” China’s commercial envoy in Manila said.

Speaking to the more than 200 delegates who attended the just concluded Manila Times Business Forum, First Secretary Wang Yang of the China Embassy said China and the Philippines are not only neighbors, but also close relatives with a history of friendly exchanges for more than a millennium.

“Since the establishment of diplomatic relations between our two nations, we have witnessed significant progress in our bilateral friendship and common development, which has laid a good foundation for business and trade cooperation,” he said.

According to Chinese Customs Statistics, two-way trade between the two countries last year stood at US$38 billion, registering 4.7 percent growth.


In the first eight months of 2014, that amounted to nearly US$28 billion, increasing by 15 percent over the same period of last year, according to the data from the China Embassy.

“The two-way investments are also active. The Philippines is the fourth biggest foreign investor in China among Asean countries, and according to Philippine statistics, China is the eighth biggest foreign investor in the country since 2000.

“Chinese companies are investing in the power, agricultural and manufacturing sectors of the Philippines, while big Philippine enterprises like Oishi, SM and Jollibee have been players in the Chinese market for many years.

“I believe our countries can overcome difficulties for a brighter future together. I wish that countries involved in free trade agreements and links would be successful in attaining their respective targets,” Wang added.

‘China GDP to double in 10 years’
China is expecting its economy and per capita income to double in 10 years from the levels recorded in 2010.

“By 2020, China’s GDP [gross domestic product]and per capita income will double from the figures recorded in 2010. We need to maintain over 7 percent GDP growth every year for this to happen,” Wang said.

To back up the forecast, Wang cited “remarkable figures last year up to the present: 7.7 percent (GDP) growth for full year 2013, and 7.4 percent GDP growth in the first three quarters of 2014.”

There have been indications the rising cost of labor and production has started prompting some investors to consider other areas of investment outside of China.

Aside from labor costs, the Chinese economy also faces other challenges that could drive away investment, such as a talent crunch and an aging workforce; rising production costs; protectionism; increased competition; and environmental issues relevant to urbanization.

Despite such concerns, Wang said the government is optimistic that investment will remain high.

He pointed to data showing foreign direct investments (FDI) in China last year totaled $118 billion, up 5.3 percent over a year earlier.

Local companies alone accounted for more than $19 billion of the total, up 17 percent from the year-ago FDI level, he said.

China’s rising labor cost
Richard Cant, the Shanghai-based director of the Yangtze River Delta region of business management consultancy services Dezan Shira & Associates, said the government looks confident that investment in the country will continue to grow in the years ahead despite worries about the rising cost of production in China.

“There is 15 percent year-on-year growth in labor costs. The consequences of that are the Chinese and European companies looking at other markets [than China]. Western companies are looking at countries in the Asean [Association of Southeast Asian Nations],” Cant said in the same forum.

“Investors are looking at these countries, but no one in the Southeast Asian region delivers like China does, especially in infrastructure,” he said.

Describing the Yangtze River Delta region as “the powerhouse of China,” Cant said investment in the region contributes the bulk of the total investments in China.

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