Inward foreign direct investment in China and its policy context.
From the establishment of the People’s Republic of China in
1949 to the adoption of economic reforms in 1978, there was almost no
foreign investment in China. In the 1980s, experiments with joint
ventures resulted in a trickle of FDI inflows dominated by the
relocation of most of Hong Kong’s manufacturing to South China.
Inward Foreign Direct Investment (IFDI) first topped USD1 billion in
1984 and by 1991, was USD4.4 billion. (1) With new urgency given to
foreign investment attraction at the beginning of 1992 and the formal
establishment of a market economic system in that year, IFDI inflows
accelerated rapidly, reaching USD11 billion in 1992, continuing up to a
plateau of USD45 billion per year in 1997-1998. Following a decline to
around USD40 billion a year in 1999-2000, and after China’s
accession to the World Trade Organization (WTO) in 2001, FDI inflows
have continued to rise steadily. (2)
By 2009, China had accumulated an IFDI stock of USD473 billion (3)
(Table 1), well ahead of other large developing and transition economies
such as Brazil, with USD401 billion, India, with USD164 billion and
Russia, with USD253 billion (Table 1). From 2000 to 2009, China received
larger FDI inflows than any other developing or transition economy,
reaching a record USD108 billion in 2008. By comparison, 2008 IFDI flows
to Brazil were USD45 billion, to India USD42 billion and to Russia USD70
billion. In 2009, China’s IFDI fell to USD90 billion as a result of
the global economic crisis, while Brazil’s fell more sharply to
USD26 billion, Russia’s to USD39 billion, and India’s to USD35
billion (see Table 2). China’s FDI inflows recovered strongly in
the first eight months of 2010. The relatively good performance of IFDI
into China during both the Asian crisis of 1997-1998 and the current
crisis reflects international investor perceptions of China as a
reliable risk-avoidance haven.
Partly because of China’s WTO commitments to a phased
opening-up of services to foreign participation during the five years
following accession, the share of the tertiary sector in total IFDI
flows rose from 31 per cent in 2001 to 52 per cent in 2008, while at the
same time the share of the secondary sector declined from 66 per cent to
46 per cent and the always relatively tiny primary sector shrank from 4
per cent to 2 per cent. While IFDI in manufacturing rose from USD31
billion in 2001 to USD50 billion in 2008, this represented a decline in
the sector’s share of total IFDI stock from 66 per cent to 46 per
cent (see Table 3). Starting in 2002, foreigners were allowed to
participate in China’s stock markets as Qualified Foreign
Institutional Investors (QFIIs), and as their qualifications have become
less strict, an increasing number of QFIIs have set up offices in China.
Foreign banks have also expanded their operations as these have been
increasingly allowed to conduct various banking services, including
foreign currency services, for Chinese enterprises since 2002, Chinese
yuan services since 2006, and credit card issuance since 2007. At the
same time, while the burgeoning domestic market has continued to attract
manufacturers, the increase in labour costs, more recently resulting
from a wave of strikes in foreign affiliates, has prompted investors to
plan new investments in lower-cost economies such as Vietnam and
China’s IFDI appears to be mainly sourced in Asian economies.
As of 2008, 39 per cent of China’s IFDI stock was from Hong Kong, 7
per cent from Japan, 5 per cent from Taiwan, 5 per cent from the
Republic of Korea and 4 per cent from Singapore. The United States and
the European Union each supplied 7 per cent, of which the major sources
were the United Kingdom and Germany (each just under 2 per cent of total
IFDI) (see Table 4). A major obstacle to providing an accurate account
of the provenance of China’s IFDI is the high proportion circuited
through Hong Kong, and through the Caribbean and other tax havens. Hong
Kong’s matching IFDI and OFDI figures suggest that much of these
flows are pass-through to China, (4) including an element of
round-tripping, (5) though it is also important to note substantial
investment from Hong Kong in China’s burgeoning property sector. As
of 2008, Hong Kong accounted for 39 per cent of total IFDI stock, by far
the largest share. The British Virgin Islands provided 10 per cent, more
than the European Union (7 per cent), Japan (7 per cent) or the United
States (7 per cent). The Cayman Islands supplied about the same
proportion, 2 per cent, as the United Kingdom.
FDI is concentrated in China’s eastern coastal regions,
especially in Guangdong and Shanghai. (6) Guangdong’s
attractiveness as an FDI destination in the 1980s was mainly due to its
light regulation, relative remoteness from the capital, Beijing (and
therefore from central government control), its proximity to the
region’s largest port, Hong Kong, that was seeking to shed its
manufacturing sector, and the fact that it contained all but one of the
country’s special economic zones (SEZs). Shanghai, with its strong
industrial base and its advantageous location as a major port at the
mouth of the Yangtze, also drew large amounts of IFDI. A third major
development region in the old industrial heartland of North-East coastal
China has also developed. Attempts to boost FDI in China’s
less-developed interior, namely Central and West China, are continuing.
But while the physical infrastructure has been greatly improved and
lower labour costs are making the hinterland more attractive as wage
pressures mount in Guangdong, the developed coastal regions, with their
more developed business environments and local markets, remain the
largest recipients of IFDI.
THE CORPORATE PLAYERS
Many Fortune Global 500 companies are present in China. The
official list of the largest foreign affiliates by sales value in 2008
includes Nokia in second place and GM’s Shanghai offshoot in eighth
place (see Table 5). The largest foreign affiliate, Hongfujin Precision
Industry, is owned by the Foxconn Technology Group of Taiwan.
Greenfield investment dominated IFDI until the late 1990s for
reasons of policy and practicality. Before the reforms in the late
1990s, most firms were state-owned and not available for acquisition,
and there was no regulatory provision for foreign mergers and
acquisitions (M&As). In the first decade of the 21st century,
acquisition targets have become available as major enterprises have been
divested by the state, the domestic private sector has grown and
regulations governing foreign M&As have been enacted. (7) M&As
have become a major element of FDI inflows, with many medium-sized
acquisitions taking place in the past three years (see Table 6). The
rise in cross-border M&As in China has been largely stimulated by
the lure of the rapidly expanding domestic consumer market.
Recent large greenfield investments also show a tendency to focus
on China’s domestic market, but although the country’s cost
base continues to rise by comparison with regional competitors, large
investments in export manufacturing continue to be made. Recent large
greenfield investments include automobiles and automobile components (by
Daimler, Volkswagen, Yulon, Hyundai and BMW), as China has become the
world’s largest car market (see Table 7).
EFFECTS OF THE CURRENT GLOBAL CRISIS
China was less seriously affected by the global crisis than its
main trading partners. The country’s exposure to the US sub-prime
market was relatively small, (8) and the collapse of consumer confidence
in the US had a limited effect on China’s exports. (9) In addition,
the government initiated an early and rapid-acting stimulus package that
helped support continued growth. (10) IFDI flows almost certainly sank
not because of any fear of market shrinkage in China, where GDP grew by
9.6 per cent in 2008, (11) and 9.1 per cent in 2009, (12) but because of
home-country financing problems. Although no cancellations of large
foreign investments in China directly attributable to the crisis have
been made public, several foreign affiliates have suffered domestic
problems and are likely to suffer as well dampening or delayed planning
for overseas expansion.
FDI inflows to China decelerated sharply during 2008, from a rate
of increase of over 100 per cent year-on-year in January to a decline of
3 per cent in November. IFDI continued to fall over the first seven
months of 2009, picking up modestly thereafter. As a result, the annual
total shrank from USD108 billion in 2008 to USD90 billion in 2009. In
the first eight months of 2010, FDI inflows were up 18 per cent
THE POLICY SCENE
Since the 1980s and 1990s, foreign investment has been welcomed by
China’s government, after three decades of autarky. Unusually for a
transition economy, the country’s savings rate remained very high
throughout the period of reform, with the saving/ investment ratio
constantly 100 per cent or higher. Yet the lack of effective financial
intermediation prevented effective mobilisation of savings for
investment. Instead, foreign investment filled the financing gap, while
bringing along new products, new production processes, modern management
techniques, and competition for Chinese firms. Initially, foreign
affiliates substituted for the absent domestic private sector.
The government’s initial approach was pragmatic and
control-oriented. Foreign investment was allowed in a limited number of
sectors and a few locations (i.e., SEZs). Two kinds of joint ventures
were permitted, as 100 per cent foreign ownership was not allowed.
Foreign affiliates had to export their entire output. China lacked the
basic elements of an institutional framework for foreign investment,
such as adequate physical infrastructure, a mobile labour force,
internationally acceptable accounting practices and the rule of law. In
compensation, China offered fiscal incentives to foreign investors in
the SEZs, including a five-year tax holiday and a halving of the rate of
business income tax. (13)
In the 1990s, as IFDI flow rose and operating conditions improved,
China relaxed many restrictions. Wholly-foreign-owned ventures were
allowed and became popular. Export requirements were relaxed and sales
to domestic consumers allowed. The ban on private car ownership was
removed. After the world’s largest consumer population became an
available market, most of the world’s largest multinational
enterprises (MNEs) set up operations in China. After these policies
spread to other coastal regions in the late 1980s, the government
encouraged investors, including foreign ones, to invest in the
country’s interior, opening up the whole country to foreign
investment. Although this policy has resulted in an increase in
investment in the country’s hinterland, most of this has
materialised in the form of government infrastructure construction.
Investors, both Chinese and foreign, continue to invest more heavily in
the Eastern coastal region.
FDI projects are screened in accordance with laws on each category
of foreign ownership, including the 1979 Law on Sino-Foreign Equity
Joint Ventures, the 1986 Law on Wholly-Foreign-Owned Enterprises and the
1988 Law on Sino-Foreign Contractual Joint Ventures. (14) In addition to
these laws, China operates a catalogue system that combines elements of
both open and closed lists. The Catalogues for Guidance of Foreign
Investment Projects are four: prohibited, restricted, permitted and
encouraged. (15) The permitted catalogue is not published.
The prohibited catalogue is effectively a negative list, detailing
sectors in which foreign investment is not permitted. The restricted
catalogue contains sectors in which foreign investment is permitted but
in which the project examination and approval process may be stricter
and take longer; it includes some sectors opened to foreign investment
as a result of China’s WTO entry. The encouraged catalogue projects
are given favourable treatment because they comply with China’s
development policies, which are focused on promoting high-technology,
capital-intensive industry, as well as development in the Central and
Western regions. Most recently, the catalogues have emphasised the green
objectives of energy conservation, environmental protection and circular
economy (i.e., a model of economic development based on the efficient
use and recycling of resources).
China has pursued some active investment diplomacy since the early
1980s, having signed 127 bilateral investment treaties (BITs) by 1 June
2010 and 112 double taxation agreements (DTTs) by 1 June 2009.16 China
is a member of the ASEAN-China Free Trade Area (AFTA), which came into
effect on 1 January 2010. From the mid-2000s, doubts about the
desirability of foreign investment have been voiced in China. Fixed
investment, the main driver of growth in China, has been increasing at a
rate that has aroused fears of overheating. Although FDI has never been
more than 15 per cent of total gross fixed capital formation in China, a
slowing of IFDI growth has been suggested as one of several levers to
restrain breakneck investment growth. Also, several Chinese companies
have now developed to the stage where they have an interest in curbing
competition from foreign affiliates in their sectors. At the same time,
concerns have arisen that the high proportion of output from IFDI might
lead to foreign monopoly power in some strategically important sectors,
threatening national security. Finally, there have also been some
worries that over-dependence on IFDI for economic growth might lead to
problems similar to those experienced by Latin America in the 1990s.
As a result, China’s government, while rejecting calls to
raise barriers against foreign investment, appears to be taking a more
selective stance, inviting FDI to plug gaps in the Chinese economy such
as high-tech and environmental industries. To satisfy calls from
increasingly strong domestic enterprises, the government abolished the
fiscal incentives for foreign investment as of 2008, with grandfathering
and phasing clauses to ensure existing foreign investments are not
China’s IFDI flows are likely to continue to rise, but less
rapidly than the rest of the economy. Government policy, while remaining
open to FDI, can afford to become more selective because there is no
longer a nationwide absence of financial institutions, basic
infrastructure, consumer goods industries and essential services. While
cross-border M&As have been welcomed in the recent past to rescue
ailing rustbelt industries, more successful companies may not be so
readily available for foreign acquisition. Private companies appear to
prefer share issues, namely initial public offerings, to selling out to
a foreign investor. Similarly, the government’s support for large
state-owned enterprises encourages such enterprises to be acquirers,
both at home and abroad, rather than targets for inbound M&As.
The Chinese market is expanding rapidly because of the high rate of
GDP growth and efforts to rebalance the economy towards private
consumption. In the latest UNCTAD survey, market size and market growth
are found to be the major factors in China’s position as the most
favoured location for IFDI in 2009-2011. (17) But there are now more and
more large Chinese enterprises capable of manufacturing competitive
products at prices that foreign investors may find difficult to match as
fiscal incentives are phased out. Lower production factor costs in
Vietnam, Bangladesh and other developing countries in the region will
prompt investors to consider expanding their manufacturing operations in
I wish to thank Edward Turner, Guoming Xian and Benny Yan for their
(1) China Ministry of Commerce (MOFCOM) Statistics at
<www.fdi.gov.cn> [Oct. 2011]; UNCTAD, FDI/TNC database at
<http://stats.unctad.org/fdi/> [Oct. 2011].
(2) Ibid., also see Karl Sauvant and Ken Davies, “What Will an
Appreciation of China’s Currency Do to Inward and Outward
FDI?”, Transnational Corporations Review 2, no. 4 (Dec. 2010) at
<http://tnc-online. net/journal/html/?157.html> [Oct. 2011].
(3) China recalculated its FDI stock figures in 2005, which had
hitherto been simple additions of annual flows, to bring them more in
line with internationally-recognised standards such as the OECD
Benchmark Definition of FDI. The result was an approximate halving of
the original estimate. Current figures are therefore understood to take
account of disinvestments. An explanation of the divergence of Chinese
FDI statistics from internationally standard practices is in OECD,
Investment Policy Review of China: Progress and Reform Challenges
(Paris: OECD, 2003).
(4) For example, in 2007, 2008 and 2009, Hong Kong’s FDI
inflows were USD54.3 billion, USD59.6 billion and USD48.4 billion,
respectively, while simultaneous outflows from Hong Kong were USD61.1
billion, USD50.6 billion and USD52.3 billion. See UNCTAD, World
Investment Report 2010: Investing in a Low-Carbon Economy (New York and
Geneva: United Nations, 2010).
(5) “Round-tripping” refers to the practice of setting up
special purpose entities in territories outside China, including Hong
Kong, which is treated as a source of foreign investment by the Chinese
authorities to invest in China and so benefit from fiscal incentives
offered to foreign investors. Since it is often intended to deceive the
authorities, round-tripping is impossible to estimate. The practice may
be in decline as a result of the abolition of foreign investment
incentives from 2008 and tighter reporting standards for special purpose
entities established abroad by Chinese companies since 2006.
(6) Over 80 per cent has gone to the eastern region. See OECD,
2003, op. cit.
(7) Details of these regulatory changes are in OECD, Investment
Policy Review of China: Open Policies towards Mergers and Acquisitions
(Paris: OECD, 2006), updated in OECD, Investment Policy Review of China:
Encouraging Responsible Business Conduct (Paris: OECD, 2008).
(8) Statement by Assistant Governor, Yi Gang, of the People’s
Bank of China, Reuters, 28 Aug. 2007.
(9) Deutsche Bank Global Markets Research, “Surviving Export
Slowdown”, Asia China Macro Strategy Series, 1 Apr. 2008.
(10) Economist Intelligence Unit (EIU) special report,
“China’s Stimulus Package: A Six-Month Report Card”,
London, EIU, 5 Aug. 2009.
(11) On 25 December 2009, the National Bureau of Statistics
announced an upward revision from 9 per cent to 9.6 per cent for the
2008 GDP growth figure at <www.china.org.cn> [Oct. 2011].
(12) The National Bureau of Statistics announced an upward revision
from 8.7 per cent to 9.1 per cent for the 2009 GDP growth figure on 7
July 2010. See Xinhua News Agency at <http://www.chinaview.cn>
(13) Details of fiscal incentives offered before 2008 are in the
tax chapter of OECD, 2003, op. cit.
(15) For details of changes in the catalogues see: OECD, 2003, op.
cit.; OECD, 2006, op. cit.; OECD, 2008, op. cit.
(16) UNCTAD, FDI/TNC at <http://stats.unctad.org> [Oct.
(17) UNCTAD, World Investment Prospects Survey 2009-2011 (New York
and Geneva: United Nations, 2009).
Ken Davies (email@example.com) is an independent consultant
specialising in the analysis of Asian economies and policies to promote
investment for development. He is also a Visiting Professor at Durham
Business School at the University of Durham. He is currently conducting
research on the policies of China’s regional governments towards
encouraging outward direct investment.
TABLE 1 CHINA'S INWARD FDI STOCK COMPARED, 2000 AND 2009 (USD BILLION) Economy 2000 2009 China 193 473 Memorandum: comparator economies Brazil 122 401 India 18 164 Russia 32 253 Singapore 111 344 Source: UNCTAD's FDI/TNC database, available at <http://stats.unctad.org/fdi/> [Oct. 2011]. TABLE 2 CHINA'S INWARD FDI FLOWS COMPARED, 2000-2009 (USD BILLION) Economy 2000 2001 2002 2003 2004 2005 China 41 47 53 54 61 72 Compared with: Brazil 33 23 17 10 18 15 India 4 6 6 4 6 8 Russia 3 3 4 8 15 13 Singapore 17 15 6 12 20 14 Economy 2006 2007 2008 2009 2010 (a) China 69 84 108 90 66 Compared with: Brazil 19 35 45 26 17 India 20 25 42 35 13 (b) Russia 30 55 70 39 17 Singapore 28 32 23 17 14 (c) Source: UNCTAD's FDI/TNC database at <http://stats.unctad.org/fdi/> [Oct. 2011]; MOFCOM press releases at <http://www.fdi. gov.cn> [Oct. 2011]; Banco Central do Brasil Statistics at <http://www.bcb.gov.br/> [Oct. 2011]; Department of Industrial Policy and Promotion, Ministry of Commerce and Industry, Government of India FDI statistics at <http://dipp.nic.in/> [Oct. 2011]; Bank of Russia at <http://www.cbr.ru/> [Oct. 2011]; Monetary Authority of Singapore at <http://www.mas.gov.sg/> [Oct. 2011]. (a) For the first eight months only. (b) For the first seven months only. (c) For the first six months only. TABLE 3 CHINA'S DISTRIBUTION OF INWARD FDI FLOWS, BY ECONOMIC SECTOR AND INDUSTRY IN 2000 AND 2008 (USD BILLION AND PER CENT OF TOTAL INFLOWS) Sector/industry 2001 2008 Primary 1.7 1.8 (3.6) (1.7) Agriculture 0.9 1.2 (1.9) (1.1) Mining 0.8 0.6 (1.7) (0.6) Secondary 30.9 49.9 (65.9) (46.1) Manufacturing 30.9 49.9 (65.9) (46.1) Tertiary 14.3 56.6 (30.5) (52.3) Utilities 2.3 1.7 (4.9) (1.6) Construction 0.8 1.1 (1.7) (1.0) Real estate 5.1 18.6 (10.9) (17.2) Total 46.9 108.3 (100.0) (100.0) Source: MOFCOM, available at <www.fdi.gov.cn> [Oct. 2011]. Note: The Chinese authorities include "utilities" and "construction" in the secondary sector and the MOFCOM figures do not include all activities; so it is not possible to disaggregate and reconstruct the sectoral statistics entirely from their published tables. See the official definition of sectors from the annual statistical yearbook published by the National Bureau of Statistics. In China, economic activities are categorised into the following three strata of industry: (1) "Primary industry" refers to agriculture, forestry, animal husbandry and fishery and services in support of these industries; (2) "Secondary industry" refers to mining and quarrying, manufacturing, production and supply of electricity, water and gas, and construction; (3) "Tertiary industry" refers to all other economic activities not included in the primary or secondary industries. TABLE 4 CHINA'S GEOGRAPHICAL DISTRIBUTION OF INWARD OF FDI STOCK (A) IN 2002 AND 2008 (USD billion) Region/economy 2002 2008 World 448.0 899.1 Developed Economies n.a n.a Europe n.a n.a European union 33.9 61.6 Belgium 0.6 1.0 Denmark 0.5 1.3 France 5.5 8.9 Germany 8.0 15.1 Italy 2.2 4.3 Netherlands 4.3 9.3 Spain 0.4 1.5 Sweden 0.8 1.6 United Kingdom 10.7 15.7 North America 43.2 66 Canada 3.4 6.4 United States 39.9 59.7 Other Developed Economies n.a n.a Australia Japan 36.3 65.4 Developing economies n.a n.a Africa n.a n.a Mauritius n.a 7.4 Asia Hong Kong 204.9 349.6 Macau 4.8 1.8 Indonesia 1.1 1.9 Korea, Republic of 15.2 41.9 Malaysia 2.8 4.9 Philippines 1.4 2.5 Singapore 21.5 37.8 Taiwan 33.1 47.7 Thailand 2.4 3.2 Western Samoa 2.3 12.3 Latin America and Caribbean n.a n.a Barbados n.a 2.7 British Virgin Islands 24.4 90.1 Cayman Islands 3.8 16.5 unidentified others n.a 79 Source: MOFCOM at <www.fdi.gov.cn> [Oct. 2011]. (a) This statistic released by MOFCOM for purposes of geographical breakdown is cumulated FDI. As it does not include divestments, it is much larger than the IFDI stock total in Table 1, which comes closer to internationally-recognised standards of DI measurement. Table 5 CHINA'S PRINCIPAL FOREIGN AFFILIATES IN CHINA, RANKED BY SALES VALUE, 2008 (USD MILLION) Rank Name of Affiliate Industry Sales 1 Hongfujin Precision Industry Computer 26,974 (Shenzhen) Co. Ltd. peripherals 2 Nokia Telecommunication Co. Ltd. Cell phones 13,767 3 China Offshore Petroleum (China) Oil and gas 11,354 Limited 4 Dagong (Shanghai) Computer Computers 10,535 Co. Ltd. 5 Fay-Volkswagen Sales Co. Ltd. Automobiles 10,412 6 Daofeng (Shanghai) Computer Computers 9,471 Co. Ltd. 7 Angang Steel Ltd. Steel 9,424 8 Shanghai GM Automobile Co. Ltd. Automobiles 9,366 9 Fay-Volkswagen Co. Ltd. Automobiles 9,217 10 Motorola (China) Electronic Ltd. Telecom 8,099 equipment 11 Maanshan Steel Co. Ltd. Steel 7,287 12 Huaneng International Power Electricity 7,257 Co. Ltd. generation 13 Shanghai Volkswagen Automotive Automobiles 7,233 Sale Ltd. 14 Dongfeng Toyota Auto Sale Co. Automobiles 7,145 Ltd. 15 Dongfeng Auto Company Automobiles 7,057 16 Air China Co. Ltd. Airline 6,767 17 Shanghai Volkswagen Automobiles 6,734 Automotive Ltd. 18 Yingshunda Science & Technology Consumer 6,430 Co. Ltd. electronics 19 Nokia (China) Investment Cell phones 6,393 Co. Ltd. 20 China Southern Airlines Airline 6,350 Co. Ltd. TABLE 6 CHINA'S MAIN INWARD M&A DEALS BY INWARD INVESTING FIRM, 2007-2009 Year Acquiring Company Home Economy 2009 Function Well Ltd. Taiwan 2009 MAN Finance & Holding Sarl Luxembourg 2009 GCL-Poly Energy Holdings Ltd Hong Kong 2009 GCL-Poly Energy Holdings Ltd Hong Kong 2009 TM Entertainment & Media Inc United States 2009 HongKong Electric (Holdings) Hong Kong Ltd. 2009 Asahi Breweries Ltd Japan 2009 GIC Real Estate Pte Ltd Singapore 2009 ADF Phoenix IV Ltd Singapore 2009 Hana Bank Korea, Republic of 2009 Franshion Ppty (China) Ltd Hong Kong 2009 BBVA Spain 2009 CRH PLC Ireland 2009 Investor Group Hong Kong 2009 Middle Kingdom Alliance Corp United States 2008 BP Overseas Development Co Thailand Ltd 2008 Jade Green Investments Ltd Hong Kong 2008 Johnson & Johnson United States 2008 Deutsche Bank AG Germany 2008 Holcim Ltd Switzerland 2008 Monster Worldwide Inc United States 2008 Songzai Intl Holding Group United States Inc 2008 Hong Leong Bank Bhd Malaysia 2008 CapitaRetail China Trust Singapore 2008 Blackstone Group LP United States 2008 Shui On Investment Co Ltd Hong Kong 2008 Beiersdorf AG Germany 2008 Bank of America Corp United States 2008 Bank of America Corp United States 2008 CITIC Pacific Ltd Hong Kong 2007 China Merchants Intl Hong Kong Terminals 2007 China Real Estate Opp Luxembourg 2007 Asia Bottles (HK) Co Ltd Hong Kong 2007 China Mining Resources Grp Hong Kong Ltd 2007 GuocoLand (China) Ltd Hong Kong 2007 Investor Group United States 2007 Panva Gas Holdings Ltd Hong Kong 2007 BBVA Spain 2007 3Com Corp United States 2007 Haier Electronics Group Co Hong Kong Ltd 2007 SEB Internationale SAS France 2007 ANZ Banking Group Ltd Australia 2007 Investor Group United States 2007 FedEx Express Corp United States 2007 UBS AG Switzerland Year Acquiring Company Target Company 2009 Function Well Ltd. Champ Tech Optical Foshan Corp 2009 MAN Finance & Holding Sarl Sinotruk (Hong Kong) Ltd 2009 GCL-Poly Energy Holdings Ltd Greatest Joy International Ltd 2009 GCL-Poly Energy Holdings Ltd GCL Solar Energy Tech Hldg Inc 2009 TM Entertainment & Media Inc Hong Kong Mandefu Holdings Ltd 2009 HongKong Electric (Holdings) Outram Ltd Ltd. 2009 Asahi Breweries Ltd Tsingtao Brewery Co. Ltd. 2009 GIC Real Estate Pte Ltd ProLogis-China Operations 2009 ADF Phoenix IV Ltd Nanjing International Finance 2009 Hana Bank Bank of Jilin Co Ltd 2009 Franshion Ppty (China) Ltd China Jin Mao (Group) Co Ltd 2009 BBVA China Citic Bank 2009 CRH PLC Jilin Yatai Grp Cement Invest 2009 Investor Group Shanghai Shimao Co Ltd 2009 Middle Kingdom Alliance Corp Pypo Digital Co Ltd 2008 BP Overseas Development Co Asian American Coal Inc Ltd 2008 Jade Green Investments Ltd Fortune Dragon Coking Coal 2008 Johnson & Johnson Beijing Dabao Cosmetics Co Ltd 2008 Deutsche Bank AG Huaxia Bank Co Ltd 2008 Holcim Ltd Huaxin Cement Co Ltd 2008 Monster Worldwide Inc ChinaHR.com Holdings Ltd 2008 Songzai Intl Holding Group Heilongjiang Xing An Grp Hong, Inc Yuan Coal Mining Co. Ltd 2008 Hong Leong Bank Bhd Chengdu City Commercial Bank 2008 CapitaRetail China Trust Xizhimen Mall 2008 Blackstone Group LP China National Chemical Corp 2008 Shui On Investment Co Ltd Shui On Land Ltd 2008 Beiersdorf AG C-BONS Hair Care 2008 Bank of America Corp China Construction Bank Corp 2008 Bank of America Corp China Construction Bank Corp 2008 CITIC Pacific Ltd CSSC Complex Property Co Ltd 2007 China Merchants Intl Zhanjiang Port (Group) Co Ltd Terminals 2007 China Real Estate Opp City Centre Development Phases 2007 Asia Bottles (HK) Co Ltd Zhuhai Zhongfu Entrp Co Ltd 2007 China Mining Resources Grp Harbin Songjiang Copper (Grp) Ltd Ltd 2007 GuocoLand (China) Ltd Beijing Chengjian Donghua RE 2007 Investor Group Guangzhou Hengda Indl Grp Co 2007 Panva Gas Holdings Ltd Hong Kong & China Gas (Qingdao) 2007 BBVA China Citic Bank 2007 3Com Corp Huawei-3com Co Ltd 2007 Haier Electronics Group Co Haier Indesit (Qingdao) Washing Ltd 2007 SEB Internationale SAS Zhejiang Supor Cookware Co Ltd 2007 ANZ Banking Group Ltd Shanghai Country Commercial Bank 2007 Investor Group Henan Luohe Shuanghui Industry 2007 FedEx Express Corp Federal Express-DTW Co Ltd 2007 UBS AG Beijing Securities Co Ltd Year Acquiring Company Target Industry 2009 Function Well Ltd. Optical instruments 2009 MAN Finance & Holding Sarl Industrial vehicles manufacturing 2009 GCL-Poly Energy Holdings Ltd Semiconductors 2009 GCL-Poly Energy Holdings Ltd Semiconductors 2009 TM Entertainment & Media Inc Advertising agencies 2009 HongKong Electric (Holdings) Electric services Ltd. 2009 Asahi Breweries Ltd Beverages 2009 GIC Real Estate Pte Ltd Land developers 2009 ADF Phoenix IV Ltd Building operator 2009 Hana Bank Financial services 2009 Franshion Ppty (China) Ltd Building operator 2009 BBVA Banking 2009 CRH PLC Investors 2009 Investor Group Land developers 2009 Middle Kingdom Alliance Corp Electronic equipment 2008 BP Overseas Development Co Mining Ltd 2008 Jade Green Investments Ltd Mining 2008 Johnson & Johnson Cosmetics 2008 Deutsche Bank AG Banking 2008 Holcim Ltd Cement 2008 Monster Worldwide Inc Employment agencies 2008 Songzai Intl Holding Group Mining Inc 2008 Hong Leong Bank Bhd Banking 2008 CapitaRetail China Trust Building operator 2008 Blackstone Group LP Chemicals 2008 Shui On Investment Co Ltd Land developers 2008 Beiersdorf AG Cosmetics 2008 Bank of America Corp Banking 2008 Bank of America Corp Banking 2008 CITIC Pacific Ltd Real estate 2007 China Merchants Intl Transportation Terminals 2007 China Real Estate Opp Real estate 2007 Asia Bottles (HK) Co Ltd Manufacturing 2007 China Mining Resources Grp Mining Ltd 2007 GuocoLand (China) Ltd Real estate 2007 Investor Group Conglomerate 2007 Panva Gas Holdings Ltd Oil and gas 2007 BBVA Banking 2007 3Com Corp Telecommunications 2007 Haier Electronics Group Co Electrical goods Ltd 2007 SEB Internationale SAS Electrical goods 2007 ANZ Banking Group Ltd Banking 2007 Investor Group Food 2007 FedEx Express Corp Transportation 2007 UBS AG Financial services Year Acquiring Company Shares Transaction Acquired Value (USD (per cent) million) 2009 Function Well Ltd. 100 230.6 2009 MAN Finance & Holding Sarl 25 782.2 2009 GCL-Poly Energy Holdings Ltd 100 911.6 2009 GCL-Poly Energy Holdings Ltd 100 3,787.50 2009 TM Entertainment & Media Inc 100 263.6 2009 HongKong Electric (Holdings) 100 732.6 Ltd. 2009 Asahi Breweries Ltd 20 667 2009 GIC Real Estate Pte Ltd 100 1,300.00 2009 ADF Phoenix IV Ltd 100 232.8 2009 Hana Bank 19.7 327.4 2009 Franshion Ppty (China) Ltd 45.1 737.5 2009 BBVA 4.9 1,601.60 2009 CRH PLC 26 296.7 2009 Investor Group 56.8 1,012.10 2009 Middle Kingdom Alliance Corp 100 378 2008 BP Overseas Development Co 78.4 432.8 Ltd 2008 Jade Green Investments Ltd 100 1,350.80 2008 Johnson & Johnson 100 327.8 2008 Deutsche Bank AG 5.3 552.9 2008 Holcim Ltd 18.6 282.7 2008 Monster Worldwide Inc 55 225 2008 Songzai Intl Holding Group 90 550 Inc 2008 Hong Leong Bank Bhd 20 261 2008 CapitaRetail China Trust 100 229.3 2008 Blackstone Group LP 20 600 2008 Shui On Investment Co Ltd 5.1 230.2 2008 Beiersdorf AG 85 381.4 2008 Bank of America Corp 8.4 7,067.40 2008 Bank of America Corp 2.6 1,860.50 2008 CITIC Pacific Ltd 49 213.3 2007 China Merchants Intl 45 215.8 Terminals 2007 China Real Estate Opp 100 548.1 2007 Asia Bottles (HK) Co Ltd 29 225 2007 China Mining Resources Grp 75.1 233.8 Ltd 2007 GuocoLand (China) Ltd 90 751.7 2007 Investor Group 8 400 2007 Panva Gas Holdings Ltd 100 393.5 2007 BBVA 5 648.5 2007 3Com Corp 49 882 2007 Haier Electronics Group Co 70 385.4 Ltd 2007 SEB Internationale SAS 22.7 311.4 2007 ANZ Banking Group Ltd 19.9 263 2007 Investor Group 100 251.5 2007 FedEx Express Corp 100 400 2007 UBS AG 20 210.5 Source: Thomson ONE Banker. Thomson Reuters. TABLE 7 CHINA'S MAIN 20 GREENFIELD PROJECTS, JUNE 2006-SEPTEMBER 2009 Year Company Name Home Economy 2009 Royal Dutch Shell Netherlands 2009 Cheng Shin Rubber Taiwan Industry 2009 Michelin France 2009 Chevron Corporation United States 2009 Chevron Corporation United States 2009 Novartis Switzerland 2009 Hon Hai Precision Taiwan Industry 2009 Charoen Pokphand Group Thailand 2009 Hon Hai Precision Taiwan Industry 2009 Samsung Republic of Korea 2009 Shimao Property Holdings Hong Kong Ltd. 2009 LG Republic of Korea 2009 China Merchants Holdings Hong Kong (International) 2009 Daiwa House Industry Japan 2009 Jumbo Lane Investments United Kingdom 2008 Daimler AG Germany 2008 ROSM France 2008 Royal Vopak Netherlands 2008 Howard Group Development Hong Kong 2008 Walt Disney United States 2008 SK Energy Republic of Korea 2008 Henderson Hong Kong 2008 Lotte Group Republic of Korea 2008 Volkswagen Germany 2008 Electric Power Japan Development (J-Power) 2008 Yulon Motor Taiwan 2008 Hyundai Motor Republic of Korea 2008 Compal Electronics Taiwan 2008 Saudi Basic Industries Saudi Arabia (SABIC) 2008 Israel Corp (IC) Israel 2007 China Resources Power Hong Kong Holdings (CRP) 2007 Mori Building Japan 2007 Formosa Plastics Group Taiwan (FPG) 2007 Ben Rautin Malaysia 2007 Hon Hai Precision Industry Taiwan 2007 IBM United States 2007 Gulf Finance House Bahrain 2007 Kingdom Hotel Investments UAE (KHI) 2007 Hynix Semiconductor Republic of Korea 2007 Sinar Mas Group Indonesia 2007 Villar Mir Group Spain 2007 DBS Group Holdings Singapore 2007 STX Corporation Republic of Korea 2007 Bayerische Motoren Werke Germany (BMW) 2007 Intel United States Year Company Name Industry Estimated/ Announced Investment Value (USD billion) 2009 Royal Dutch Shell Coal, oil and 0.8 natural gas 2009 Cheng Shin Rubber Rubber 1.0 Industry 2009 Michelin Rubber 1.0 2009 Chevron Corporation Coal, oil and 4.7 natural gas 2009 Chevron Corporation Coal, oil and 0.8 natural gas 2009 Novartis Biotechnology 1.0 2009 Hon Hai Precision Electronic 1.0 Industry components 2009 Charoen Pokphand Group Food & tobacco 1.2 2009 Hon Hai Precision Electronic 1.0 Industry components 2009 Samsung Electronic 2.2 components 2009 Shimao Property Holdings Real estate 1.2 Ltd. 2009 LG Electronic 4.0 components 2009 China Merchants Holdings Warehousing & 1.2 (International) storage 2009 Daiwa House Industry Real estate 0.8 2009 Jumbo Lane Investments Coal, oil and 0.8 natural gas 2008 Daimler AG Automotive OEM 0.9 2008 ROSM Consumer products 2.0 2008 Royal Vopak Warehousing & 1.0 storage 2008 Howard Group Development Transportation 1.5 2008 Walt Disney Leisure & 3.6 entertainment 2008 SK Energy Chemicals 2.0 2008 Henderson Real estate 1.4 2008 Lotte Group Real estate 1.0 2008 Volkswagen Automotive OEM 0.9 2008 Electric Power Coal, oil and 0.7 Development (J-Power) natural gas 2008 Yulon Motor Automotive OEM 0.7 2008 Hyundai Motor Automotive OEM 0.8 2008 Compal Electronics Business machines 0.7 & equipment 2008 Saudi Basic Industries Chemicals 1.7 (SABIC) 2008 Israel Corp (IC) Automotive OEM 0.8 2007 China Resources Power Metals 2.8 Holdings (CRP) 2007 Mori Building Real estate 1.0 2007 Formosa Plastics Group Metals 0.9 (FPG) 2007 Ben Rautin Transportation 3.0 2007 Hon Hai Precision Industry Electronic 1.0 components 2007 IBM Semiconductors 1.8 2007 Gulf Finance House Real estate 5.0 2007 Kingdom Hotel Investments Hotels & tourism 0.9 (KHI) 2007 Hynix Semiconductor Semiconductors 1.5 2007 Sinar Mas Group Paper, printing & 1.0 packaging 2007 Villar Mir Group Metals 1.4 2007 DBS Group Holdings Financial services 2.8 2007 STX Corporation Non-automotive 1.0 transport OEM 2007 Bayerische Motoren Werke Automotive OEM 0.8 (BMW) 2007 Intel Semiconductors 2.5 Source: FDI Intelligence, a service from the Financial Times Ltd.