China still ripe for investment: experts

Updated: 2015-03-30 06:13

By JACK FREIFELDER in New York(China Daily USA)

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China still ripe for investment: experts

Savio Tung (right), chief investment officer of InvestCorp, speaks to the audience on March 27 at Columbia University during the school's eighth annual China Business Conference. Tung joined Joseph Zeng, a partner at Greenwoods Asset Management, an investment firm that focuses on companies on the mainland, to talk about investing in China. PROVIDED TO CHINA DAILY

Despite the deceleration in China's economy, there still are opportunities for foreign investment on the Chinese mainland, according to a partner with a China-based group.

"Though China's macro performance continues to deliver disappointing numbers, investors have started realizing they can identify some investment opportunities — even in the slowdown," said Joseph Zeng, a partner at Greenwoods Asset Management, an investment firm specializing in mainland companies.

"The current Chinese government has a strong view against corruption, and they're more pro-reform," he said. "The good news is policymakers have started to tackle these issues. Liberalization of the economy and currency are happening too, and there's been expansion of the QFII (Qualified Foreign Institutional Investor) program."

Sue Xu Zhang, a managing director with the Chicago-based Aurora Investment Group, said one of the several drivers of inbound investment to China for many multinationals is still the "huge potential" they see in China's domestic market.

"When you look at the opportunities, one of the first things people look at is the stability of the political situation," Zhang said. "Cheap labor and other factors make economic sense for many corporations to invest in China, so these are all very important factors to consider."

Zhang also said the leaders of the government in Beijing have proven to be "very open" to a variety of investments.

Nonetheless, many companies are focusing on the online/Internet industry or the media and entertainment investment opportunities, Zhang said. These spheres are "not very labor intensive" and they "provide better justified investment returns," she said.

"Once you establish a platform, the incremental cost is minimal, while you can reach a lot of markets with very similar fixed costs," Zhang said. "Those sectors continue to provide very attractive investment opportunities."

Zeng and Zhang spoke on March 27 during the eighth annual China Business Conference at Columbia University.

Columbia's Greater China Society hosted the symposium, The Global Impact of China's Rising Power, with the Columbia Business School. More than 500 guests attended.

Michael Malone, associate dean of the Columbia Business School, said in opening the event that "there's arguably no other geography on the planet that has as much active development across such a range of industries''.

In one of the conference's keynote addresses, Zeng talked about waning foreign participation in China's domestic markets, issues facing the Chinese economy going into the final stages of China's 12th Five-Year plan (2011-2015), and the impact of the Silk Road Economic Belt initiative.

Zhang spoke during a later panel, entitled, Cross-Border Investment Outlook: Is the Grass Greener on the Other Side?

Junheng Li, head of research at JL Warren Capital, said multinationals looking to invest in China must consider that the cost of doing business has gone up.

"Whether it's labor, rent, commodities, the cost curve has shifted up," Li said during a chat on cross-border investments. "At the end market we see an uptick on the number of multinationals getting to China to get a piece of the consumer market, but it's a pretty tricky game. It looks attractive, but whether it's successful for individual companies requires a lot of balances.

"It's not just labor cost that's increasing," she said. "There are other costs that are inflating as well. The RMB is soft-pegged to the US dollar, and the dollar has been strengthening. That means Chinese exporters are facing overseas challenges, so margins are definitely suffering across the board. And capital markets typically do not like unpredictability."