Make complex easy.
expert guidance for customers who want to do business with Chinese companies.
|China Profile 2009|
The bigger picture:
China has kept climbing the ladder of the global economic hierarchy and is now the thrird largest economy in the world. Though affected by the global financial crises China’s economy still grew by 8,7% throughout 2009. Some would argue that the Chinese government had predicted an uprising financial instability and therefore ordered much stricter lending regulations for banks just before the financial crises became a reality. In China, one of the most obvious indicators of government monetary policy is the real estate marked where prices took a dramatic dive just before news of the crises reached the public. The decrease in economical activity in Europe and the US had a big impact on the Chinese exports and the manufacturing industry in China. Though the Chinese government tried to counter attack by boosting consumption in rural areas through enormous infrastructure investment packages, a noticeable amount of export dependant factories were forced to throw in the towel. Still the far majority of export dependant Chinese enterprises has managed throughout the crises relying on a increased local spending.
Faced by a dramatic global economical slowdown Kinakontakten still managed to increase sales by 25% compared to the previous year. The cooperation with Hongkong registered investment company DGN has brought life to the joint venture the China mainland registered NBSC which now offers us the opportunity to invest in local Chinese enterprises. Investment we focus on buying shares in the manufacturing facilities we are cooperating with. In the fast growing Chinese economy investment opportunities are many. We aim our investment at medium sized manufacturing facilities situated outside the already developed Shanghai, Beijing and Guangdong regions. The majority of medium seized Chinese manufacturers in these regions rely solely on accumulated capital when processing exports orders. The absence of bank credits is a very large obstacle when the far majority of reasonably sized European clients require credit time up to 60 days before payment LC is released. The registration of NBSC and local Chinese business certificate allows us to buy shares in our manufacturers which gives them access to capital that instantly allows their businesses to flourish. Quanzhou Qingyi garments is a very good example of a successful investment venture. NBSC owned by Kinakontakten and DGN bought in the beginning of 2009 a 30% share post in Quanzhou Qing Yi garments. The immediate access to capital allowed the very well managed Qing Yi to accept the required payment terms of major foreign textile clients which resulted in sales reaching 9.2 mil USD compared to 5.5 USD the previous year. The increase in sales volume was not solely achieved through the access to capital. After the buy in to Qing Yi became a reality NBSC and Kinakontakten reorganized the Shanghai organization and sent three senior textile production specialist to the Qing Yi production facility. Kinakontakten textile specialist are now situated in Qing Yi and taking active part in optimizing communication with customers, further strengthening in-house quality inspection and improving production line efficiency.