Foreign Investment Flows Into China after SARS Crisis

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Last updated at: (Beijing Time) Sunday, July 13, 2003

Foreign Investment Flows Into China after SARS Crisis

The epidemic of severe acute respiratory syndrome (SARS) has not affected foreign investors' confidence in China's economic future as a host of new foreign investment plans take shape.

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The epidemic of severe acute respiratory syndrome (SARS) has not affected foreign investors' confidence in China's economic future as a host of new foreign investment plans take shape.

On June 24 when the World Health Organization (WHO) removed Beijing from its list of SARS-infected areas and lifted its travel advisory against the city, Motorola said all its China investment plans would be implemented.

The company will continue to expand in China and plans to build a research and development (R&D) center in Beijing, invest one billion US dollars for R&D purposes and hire 4,000 R&D staff in the next five years.

Motorola's annual output value and total investment in China will amount to 10 billion US dollars respectively by 2006, sourceswith the company said.

Meanwhile, manufacturing giant Toshiba said the Chinese market will be the mainstay of its global operation by 2008 as the company plans to increase its investment in China by stages in thenext five years.

Like Motorola and Toshiba, foreign manufacturing enterprises such as Siemens, Shell and Samsung, which were not much affected by SARS, are also confident in developing their businesses in China.

Siemens plans to increase its sales in China to 11 billion euros by 2005 and employ another 6,000 people. At present, the German company employs 25,000 people in China.

By 2005, Shell's total investment in China will amount to five billion US dollars. Meanwhile, sales of Samsung in China's mainland will be increased to 14 billion US dollars, making China the largest overseas market for the Korean company.

Although heavily hit by SARS, the retail and tourism industriesare experiencing rapid growth and attracting wide attention from overseas investors.

World retail giant Wal-Mart opened a supermarket in Beijing in June and plans to establish 80 Wal-Mart outlets in 20 Chinese cities by 2005, with annual sales totaling 30 billion yuan (3.63 billion US dollars).

In the next three years, Carrefour will open 70 new stores in China, bringing its China operations to 100 and increasing its annual sales to 30 billion yuan (3.63 billion US dollars).

Foreign travel agencies have been allowed to establish branchesand share-holding companies in China since July 2003, further boosting China's tourism market.

Travel agent JTB Corp. has filed an application to establish branches in the major Chinese cities of Shanghai and Guangzhou. The number of Japanese tourists coming to Shanghai through JTB totaled 130,000 in 2002.

American Express, a major credit card, financial and travel service provider, established a business travel management center in China. An American Express survey shows that annual travel and related expenses total 10 billion US dollars in China with business travel expenses amounting to some five billion US dollars,almost the same as that of European developed countries such as France and Germany.

American Express plans to extend its travel network to some 40 Chinese cities before March 2004.

After the outbreak of SARS, food, pharmaceutical and insurance industries quickly attracted wide attention from investors worldwide due to huge market potentials being demonstrated in China's nationwide fight against the epidemic.

GlaxoSmithKline Biologicals Shanghai Ltd. has decided to localize all its product lines in the next one or two years. Sources with the pharmaceutical giant said people will attach greater importance to health care and disease prevention after SARS, further boosting the Chinese pharmaceutical market.

Since SARS hit China's mainland early this year, American giant Amway faced difficulty meeting the huge demand for some of its Nutrilite health-care food and detergents. Amway announced that the company will increase the registered capital of its China operation by 50 percent to a total of 120 million US dollars.

At the same time, world insurance giant American International Group, Inc. (AIG) expected that its life insurance premiums would increase by 40 percent this year in China, demonstrating an increasing awareness of Chinese people to prepare for the risks caused by sudden crises such as SARS.

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