Trade disputes between China and the US have prompted Chinese companies to be more internationalized by building diversified sales networks, new innovation and manufacturing facilities across the world, especially in economies related to the Belt and Road Initiative, said executives from global consulting firm Deloitte.
“We have noticed that a large number of Chinese manufacturers and service providers have started to expand their global presence via international industrial capacity cooperation, transit trade and other commercial activities at a notable pace,” said Zhang Xiaofan, partner of Deloitte’s global Chinese services group.
The Sino-US trade tension will not push any country or region to replace China’s position in terms of supporting the global supply chain, he said, adding that because of the differences of language, currency and political systems, the member economies of the Association of Southeast Asian Nations cannot match China’s ability in manufacturing, services and logistics operation, especially in the area of high-end factory business.
To minimize the risks, Derek Lai, vice-chairman of Deloitte China, said Chinese companies today are keen to explore third-party market cooperation. These moves will bring benefits to European countries such as the United Kingdom, France, Spain and Portugal and help them better participate in the BRI development, without causing a clash of interests.
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Projects involving China, France and some French-speaking African countries are a case in point, he said, noting major diplomatic events hosted in China also expanded the BRI’s influence on the international stage. The country has played an increasingly important role in facilitating BRI economies’ development.
According to the second Belt and Road Countries Investment Index Report jointly issued by Deloitte and the Shanghai Municipal Commission of Commerce earlier this week, highlighting the latest trends in BRI investment from 2017 to 2018, the overall investment attractiveness of the BRI markets has risen, particularly in Southeast Asia.
The report predicted that Chinese companies’ investment in BRI economies will maintain steady growth in investment flow and diversify their areas of cooperation.
“Apart from traditional industries such as power, oil and petrochemicals, and transportation construction, the investment focus of Chinese business will extend to sectors including leasing and business services, financial services, wholesale and retail, and new and high-end technologies,” said Cao Mei, a financial advisory partner at Deloitte China.
Among the BRI destinations, most of the 20 economies with the highest investment attractiveness are in Southeast Asia and the Middle East. Singapore and India show high growth potential, according to the report.