Mon, Jun 28, 2010 page11

• Chinese seek European base in Ireland

  ‘BEIJING ON SHANNON’ Chinese firms are pouring money into cash-strapped Ireland and Greece — and even the UK — to gain a foothold in Europe for their products

  • THE OBSERVER
  • • 
    • 
    • 

  The Chinese have spotted another buying opportunity: Europe. After snapping up large tracts of Africa to extract oil and minerals, Chinese businesses are taking advantage of cash-strapped eurozone nations to gain a foothold.

  As soon as next month a group of Chinese manufacturers hope to get the green light to develop a 50 million euro (US$62 million) plot in Athlone, Ireland and begin transforming it into what local papers have dubbed Beijing-on-Shannon.

  Similar plans are under way in Greece, which along with Ireland has been the worst hit by the credit crunch and financial crisis.

  Both countries are under pressure to bolster government finances at a time when most homegrown industries are flat on their back.

  Greek officials have signed deals to allow Chinese shipbuilding and hotel construction with Chinese management and workers in the driving seat. Chinese investors are also said to be considering buying the train system that Greece has put up for sale to raise funds.

  The British government is about to advertise the sale of assets, including the air traffic control system NATS, which the Chinese are reportedly interested in.

  Ireland is keen to build on its reputation for supporting high-tech foreign manufacturers such as the California-based Hewlett-Packard and Intel.

  The Athlone project, which has yet to gain planning approval, involves shipping 2,000 Chinese workers to build a “Chinese hub” of factories on a 240-hectare stretch of land outside the County Westmeath town that will eventually employ 8,000 Irish staff.

  The manufacturers would gain access to the lowest corporation tax rates in Europe and the M6 motorway to Dublin, and doorstep-access to the eurozone for their products. Tariffs and quotas imposed by the EU and individual countries would be bypassed.

  Irish Prime Minister Brian Cowen gave his blessing last week to the project, which promises to cut the entire region’s welfare roles. Cowen said he had met Chinese promoters and businessmen to hammer out a deal, though there are few details.

  It is understood that bulldozing the land would result in the construction of a school, railway station and hundreds of factory units and apartments.

  Greece is also a beneficiary of the billions of dollars languishing in Chinese government coffers after a decade of trade surpluses.During a visit to Athens in the middle of this month, Chinese Vice Premier Zhang Dejiang (張德江) signed a series of industrial cooperation deals.

  Just as Greek bonds were downgraded to junk status by credit rating agencies, Zhang promised his country’s government “will encourage Chinese businesses to come to Greece to seek investment opportunities.”

  While Athens is desperate to see any foreign investors taking an interest in their debt-ridden economy, Beijing is keen to build a European base for its consumer good exports.

  China Ocean Shipping Group Co, (Cosco, 中遠集團), the ambitious and powerful Chinese shipping group, promised to proceed with a US$3.5 billion plan to build a massive container-handling facility at the port of Piraeus and turn it into a regional hub.

  There is also talk of Cosco building a huge logistics center there, from where trucks would be able to move containers around the rest of the continent.

  Chinese construction firm BCEGI used the top-level visit to sign a 100 million euro agreement to develop a hotel and shopping mall complex in Piraeus, while there is talk of Beijing money being injected into loss-making Greek railway operator OSE, the airports and even the postal service.

  Partnerships on everything from telecoms to olive oil have been signaled.

  “We have discussed other investments with them, notably in tourism and infrastructure,” Greek Deputy Prime Minister Theodoros Pangalos said.

  It is not all one-way traffic. Greek shipowners are hugely influential on the world maritime stage and 15 bulk carrier orders were signed by Greek operators to be constructed in China.

  Last year Greek shipping companies placed orders for 80 panamax-sized bulk carriers in China, which has within 10 years become a rival to Japan and South Korea for the title of world’s biggest shipbuilder.

  Some Washington think tanks have viewed the increasing interest in Greece by China as suspicious, fearing it part of a political move to increase the nation’s global power.

  In March, Ford agreed to sell its Volvo subsidiary to Chinese company Geely for £1.2 billion (US$1.8 billion) in a move viewed as the beginning of a shift in the car industry’s center of gravity from the West to China.

  The deal was the largest acquisition of an overseas carmaker by a Chinese company and the first time China had acquired a major luxury brand.

  Geely said it would keep Volvo’s manufacturing presence in Europe, where it has two car plants in Sweden and one in Belgium.

  The Chinese automotive giant also said it intended to run Volvo as a separate company with its own management team, based in Gothenburg, and a new board of directors.

  This year, China Investment Corp agreed to invest up to 800 million euros in Apax Partners’ 11.2 billion euros seventh European fund, giving existing shareholders in the fund the opportunity to waive or reduce their remaining commitments.

  CIC also took a minority stake in the private equity firm’s management company as part of the deal.

  Britain is a favored destination for Chinese companies, a recent report said, with London ranking as the most popular destination for those expanding into Europe.

  Figures from Think London show that since 1997, London has attracted 34 Chinese foreign direct investment (FDI) projects, and 15 percent of all Chinese FDI into Europe since 2002.

  “London is seen by Chinese companies as a natural base for expanding into the wider European, African and Middle East markets,” the report said.

  CNOOC has established a London office to coordinate its oil and gas exploration and foreign partnership activities in the Middle East and Africa, while medical equipment supplier Mindray has opened its European base in London, focusing on marketing and after-sales service.
• Most Popular

  • 1

    Chinese spy prosecutions tripled in four years

  • 2

    Snowfall a reminder of former ski resort on Hehuanshan

  • 3

    TSMC has begun 4-nm chip production in US, official says

  • 4

    Over 760 foreign money mules arrested last year: CIB

  • 5

    Man convicted of double murder to be executed tonight