Archive for ‘Chinese money’

01/09/2019

Did China’s growing presence in Arctic prompt Donald Trump’s offer to buy Greenland?

  • US president likely had Beijing ‘on his mind’ when he made his audacious offer, diplomat says
  • Proposal ‘could be interpreted as a very clear signal’ to China and Denmark that the US sees Greenland as part of an exclusive strategic zone, academic says
China has been building closer ties with Greenland in recent years. Photo: Reuters
China has been building closer ties with Greenland in recent years. Photo: Reuters

US President Donald Trump’s eyebrow-raising idea to buy Greenland from Denmark last month epitomised what analysts say is Washington’s fear of the growing interplay of Chinese money, Russian aggression and Arctic political division.

Of all the countries involved in the region, Denmark is feeling the most heat, and not just because Trump recently cancelled a trip and called its Prime Minister Mette Frederikse “nasty” for describing his plan to buy the world’s largest island “absurd”.

Over the past few years, both of Denmark’s self-ruled governments – Greenland and the Faroe Islands – have increasingly turned to China for commercial deals, adding weight to Beijing’s growing strategic influence in the vast area that forms the common backyard of Europe, North America and Russia.

Russia seeks Chinese support in developing Arctic shipping routes

Greenland is of particular concern to the White House and the Pentagon as it is home to the US Thule Air Force Base, located far above the polar circle and which served as the first line of defence during the cold war.
Nowadays, the island is also strategically important for the US ballistic missile early warning system, as the shortest route from Europe to North America goes via the ice-cloaked, resource-rich territory.

“Though it’s difficult to tell the motivations of President Trump, he likely had China on his mind with his Greenland offer,” said a Beijing-based diplomat, who asked not to be named.

The US was likely to step up its presence in Greenland in the future, the person said.

In May, US Secretary of State Mike Pompeo accused China and Russia of introducing a strategic power struggle into the Arctic region and described Beijing’s behaviour there as aggressive.

When Greenland signalled an interest in engaging a Chinese state-owned company to build two airports in 2017 – the island’s prime minister flew to Beijing to appeal for financial backing – Copenhagen stepped in amid US pressure, reluctantly agreeing to finance the projects from the public coffers.

Denmark’s reluctance stems from a long-standing mistrust between Copenhagen and Greenland, as the island’s quest for economic development is viewed by the Danes as an attempt to shore up capital to push for a future independence movement.

“There is no doubt that the US foreign and security policy community is becoming far more interested in Greenland as a strategic asset,” said Andreas Bøje Forsby, a researcher at the University of Copenhagen’s Nordic Institute of Asian Studies.

“Proposing to buy Greenland could be interpreted as a very clear signal to both China and Denmark that Greenland is part of an exclusive American strategic zone,” he said.

Danish Prime Minister Mette Frederikse described Donald Trump’s plan to buy Greenland as “absurd”. Photo: Reuters
Danish Prime Minister Mette Frederikse described Donald Trump’s plan to buy Greenland as “absurd”. Photo: Reuters

The government of the Faroe Islands – an archipelago located between Scotland, Norway and Iceland – has a similar readiness to engage with China but for a different purpose.

Unlike Greenland, there are no immediate political movements calling for independence from Denmark, making its overall relationship with Copenhagen more amiable.

This month, the Faroese government will open a liaison office in Beijing, located within the Danish embassy.

“Our top priority is to have a free-trade agreement with China,” Sigmundur Isfeld, the first head of the Faroe Islands’ representation to Beijing, said.

US defence report flags China’s expanding military reach in the Arctic

With Norway – a key competitor of the Faroes in the fishing and export industries – eyeing a similar arrangement with China, the time was ripe to clinch a deal, he said.

“It is a challenge for us … we need to get in the game.”

Although part of Denmark, the Faroe Islands are not part of the European Union and therefore have to form separate trade agreements with other countries.

“For example, there is an EU-Japan economic partnership agreement. It covers all EU nations, but it does not cover the Faroe Islands,” Isfeld said.

Trade between Greenland and China totalled US$126 million in 2108. Photo: AFP
Trade between Greenland and China totalled US$126 million in 2108. Photo: AFP

China, for its part, has sought to exert its economic and cultural influence on the Faroes, which has a population of about 52,000 people.

Huawei

, the embattled Chinese telecoms giant, has been working with the islands’ main telecoms provider for four years and is said to be finalising a plan for 5G upgrades across the archipelago.

Beijing also helped fund a project for a Chinese-Faroese dictionary.
With a population of about 56,000 people, Greenland is one of China’s smallest trading partners. In the first seven months of 2019, trade between the two was US$126 million, with Chinese imports of fish accounting for the bulk of the total.
The Greenland government’s annual political and economic report for 2019 said that strong demand for metals from China had contributed to mineral and mining projects in the country, though China’s transition to a less mineral-intensive economy could spell trouble for the future of the sector.
The island’s gross domestic product is expected to grow by 3 per cent this year, according to the report, with seafood – principally cod, halibut and prawns – set to continue to be its chief export.
The end of the Arctic as we know it
China’s attempts in recent years to expand its involvement in Greenland have run into roadblocks.
In 2016, a Chinese mining company expressed interest in taking over an abandoned marine station in Grønnedal, an offer that the Danish government turned down the following year. A Chinese state-owned construction company had also offered to build airports in Greenland, but withdrew its offer this year.
Also this year, China expanded its involvement in exporting from Kvanefjeld, one of the world’s largest deposits of rare earths and uranium, by creating a joint venture to process and export the resources.
Beijing has made clear its strategic ambitions in the region. Early last year, it unveiled its Polar Silk Road strategy, plotting the course for its future development goals in the region – including scientific, commercial, environmental preservation and resource extraction efforts.
It also aligned its Arctic interests with its Belt and Road Initiative. Chinese companies are encouraged to invest in building infrastructure along the routes and conduct commercial trial voyages to gauge feasibility.
Putin boasts of nuclear icebreaker fleet as he outlines Arctic expansion plans

Anders Rasmussen, a former Danish prime minister and erstwhile Nato secretary general, said in an article published in Atlantic magazine last month that with melting ice caps opening the Arctic Sea to shipping, Arctic sea lanes “will likely become another flashpoint of renewed competition among the great powers as climate change alters our world”.

It was a situation he said he found “regrettable, but inevitable”.

“Both China and Russia are interested in getting a foothold in Greenland, to expand their influence in the Arctic region,” Rasmussen said. “Instead of being a source of contention,

Greenland should serve to highlight how many interests the United States and Denmark have in common.”

Source: SCMP

29/07/2019

How a wave of Chinese money is powering Indian start-ups

  • China last year poured US$2.5 billion into firms in India, which is a healthy breeding ground for up-and-coming tech outfits
  • Active cooperation between these investors and entrepreneurs holds a multitude of benefits for both sides, according to industry pundits
Chinese venture capitalists are injecting funds into a variety of cash-hungry Indian businesses. Photo: Shutterstock
Chinese venture capitalists are injecting funds into a variety of cash-hungry Indian businesses. Photo: Shutterstock
Chinese President Xi Jinping and

Indian Prime Minister Narendra Modi

look set for another informal summit in October, and a key item on the agenda will be

the flow of money between their nations

.

Indian start-ups have become a major target for

deep-pocketed Chinese investors

, who have been looking to emulate their United States counterparts such as Tiger Global and Sequoia Capital that dominate the sector.

On top of this, a slowdown in start-up deals in China has nudged the country’s investors to look beyond their borders, and

India

’s affordable labour market and strong economic growth provide a healthy breeding ground for young tech outfits.

Can Bollywood be the bridge that binds India and China?
Led by heavyweights such as Shunwei Capital, Fosun International, Tencent Holdings, Xiaomi and Alibaba Group Holding – which owns the South China Morning Post –

Chinese venture capitalists

have been injecting funds into a variety of cash-hungry Indian businesses.

For many of these start-ups, the knowledge and technology of Chinese investors act as the backbone of their business Ntasha B, Venture Gurukool

Beneficiaries have included advertising firm Media.net, e-commerce operator Snapdeal, digital payment provider Paytm, online travel firm MakeMyTrip, messaging platform Hike, health tech start-up Practo and news aggregator Dailyhunt.

“For many of these

start-ups

, the knowledge and technology of Chinese investors act as the backbone of their business, along with the operational expertise of Indians in the domestic market,” said Ntasha B, co-founder of Venture Gurukool, a mentoring platform for start-ups which works closely with Indian diplomatic missions in China.

Chinese President Xi Jinping and Indian Prime Minister Narendra Modi are set to meet again in October. Photo: Xinhua
Chinese President Xi Jinping and Indian Prime Minister Narendra Modi are set to meet again in October. Photo: Xinhua

She added that Chinese investors usually had a hands-on approach and were a bit inflexible, unlike their American counterparts, who gave some elbow room in hiring local teams.

A senior executive with an Indian start-up, who did not wish to be identified, said it was sometimes straightforward to convince Chinese investors as they could relate to Indian business models and requirements that were dissimilar to those from the Western world.

The world’s second-largest economy invested nearly US$2.5 billion in Indian start-ups last year, a figure that has touched almost US$1 billion so far this year, according to finance research firm Venture Intelligence. The number of such deals jumped from just one in 2013 to 27 last year.

What does Amazon’s China departure mean for its Indian e-commerce battle?

Indian start-ups are estimated to have raised US$3.9 billion from around the globe in the first six months of this year, and the inflow from Chinese behemoths played a key role in pushing them to turn east to source funding.

“What’s more interesting about [Chinese investors’] strategy is that they’re paying more attention to rural India. If you look at the companies they’ve invested in, a fair amount of their businesses target the rural segment,” said Sandeep Murthy, managing partner at venture capital firm Lightbox Ventures, which keeps a close watch on Chinese investments. He said the brisk economic activities in India’s tier two and tier three towns are more attractive to Chinese investors than India’s urban centres.

Ctrip, China’s largest online travel agency, is drawn to the size and rapid advancement of the Indian market. Photo: Bloomberg
Ctrip, China’s largest online travel agency, is drawn to the size and rapid advancement of the Indian market. Photo: Bloomberg

WHY INDIA?

For Ctrip – China’s largest online travel agency, which in April took a 49 per cent stake in MakeMyTrip – the appeal of India was its whirlwind technological advancement and the disposable income of its massive young population.

“[MakeMyTrip has] achieved fast growth in the online travel market and is becoming well recognised in the Indian market. Their comprehensive products and services, management team and the opportunities in India result in our confidence that they will continue to succeed,” said Wei Yuan Min, a member of Ctrip’s global team. Behind the US and China, India houses the world’s third-largest start-up ecosystem in terms of the number of companies. As for the number of unicorns – start-ups valued at over US$1 billion – India ranks third, offering a vibrant habitat for entrepreneurial ventures. The country is home to 32 such firms, with the addition of nearly half a dozen so far this year and 15 last year.

In India, one man took on Chinese firm ByteDance to shut down TikTok – and he wants to do it again

New Delhi expects there to be 12,000 tech start-ups in the country by next year, up from 7,200 last year. There were 1,200 new tech firms in the sector last year, according to industry body Nasscom.

One of those capitalising on this opportunity is the Beijing-headquartered technology company Xiaomi, which last year promised to pump US$1 billion into 100 Indian start-ups over the next five years. Most of these Indian firms are involved in businesses that are ancillary to Xiaomi’s key operations.

Chinese firm Xiaomi is banking on Indian start-ups to strengthen its own products. Photo: Reuters
Chinese firm Xiaomi is banking on Indian start-ups to strengthen its own products. Photo: Reuters

“These start-ups help us in building a stronger product offering,” a Xiaomi spokesperson said. “The idea is to invest in start-ups which can further boost the mobile ecosystem in India. They could be into mobile gaming, service providers, value-added services or servicing the mobile industry.”

Xiaomi has been rapidly expanding its businesses in India, selling smartphones, television sets, security cameras, speakers, power banks, and more. India was the first market outside China where Xiaomi introduced its television sets.

Asked which sector would be Xiaomi’s focus for investment in the coming years, the spokesperson said the company was looking to focus on hardware-related start-ups in the ecosystem which could offer “robust solutions” to its Indian requirements.

Amazon, Uber and Google struggled in China, but Indian hotel chain Oyo is succeeding.

Here’s why

While hopes for India’s start-up sector are high, there have been some disappointments. There were reports this month that Alibaba, a major shareholder in Paytm, was unhappy with the Indian firm’s performance, pressuring it to realign its strategies and looking unlikely to provide fresh capital.

Paytm, a digital-payment-system unicorn, launched its own e-commerce Paytm Mall in 2016 when Walmart-backed Flipkart and Amazon were dominating the market.

However, the venture has yet to take off and is burning through cash.

Paytm refused to comment on the matter.

Paytm has attracted investment from Alibaba, but its Paytm Mall venture is struggling. Photo: Bloomberg
Paytm has attracted investment from Alibaba, but its Paytm Mall venture is struggling. Photo: Bloomberg

NEW REVENUE STREAMS

Chinese firms’ coordinated effort to enter the Indian start-up scene has made it easy for Indian ventures to access new sources of revenue. For instance, the state-run Industrial and Commercial Bank of China (ICBC), the country’s largest lender, launched an India-specific investment fund for Chinese investors in May last year.

Several Chinese venture capitalists are also providing platforms for entrepreneurs through fellowship schemes. Four Indian ventures – Zefo, Healthy Buddha, NowFloats and Grozip – took part in one such fellowship initiative run by Alibaba last year.

Gold, jewels, ‘Islamic’ finance: how India’s I Monetary Advisory built a US$365 million Ponzi scheme

India has warmly welcomed these initiatives. Amitabh Kant, chief executive of state-backed policy think tank Niti Aayog and a close aide of Modi, has publicly said China should become the topmost investor in its neighbour.

Vikram Misri, India’s ambassador to China, has also been pushing for increased economic cooperation and Chinese investment since he took charge in January, despite expressing concerns over New Delhi’s widening trade deficit with Beijing.

Vikram Misri, India’s ambassador to China, is looking for more economic cooperation between the two countries. Photo: Xiaomei Chen
Vikram Misri, India’s ambassador to China, is looking for more economic cooperation between the two countries. Photo: Xiaomei Chen

The increased Chinese investment in Indian ventures has coincided with the Modi administration’s 2015 launch of the Startup India initiative, an umbrella scheme aimed at easing related activities through measures such as tax exemptions and simplified paperwork.

Industry pundits say active cooperation between Chinese investors and Indian entrepreneurs holds a multitude of benefits for both sides.

“The cooperation gives Chinese investors global scale and opportunity to diversify their investments,” said Neil Shah, partner and research director at the technology market research firm Counterpoint.

The cooperation gives Chinese investors global scale and opportunity to diversify their investmentsNeil Shah, Counterpoint

“For Indian start-ups, this gives cross-border learning, guidance from their global investors on dos and don’ts, tactical and long-term strategy, how to create value, run operations efficiently as well as expand beyond India.”
Nilaya Varma, partner and leader of markets enablement at KPMG India, said there was a cultural shift happening in the country where young Indians brimming with ideas wanted to pursue their dreams rather than work for someone else. This brought out the entrepreneurial spirit of this generation, he said.
“The knowledge, concepts, ideas and innovations of the small start-ups in India will have a global appeal. So it makes a lot of sense for Chinese big players to invest here,” he said. 
Source: SCMP
Law of Unintended Consequences

continuously updated blog about China & India

ChiaHou's Book Reviews

continuously updated blog about China & India

What's wrong with the world; and its economy

continuously updated blog about China & India