Greek investment in China rising sharply despite problems, risks

Greek companies have nearly doubled their total invested capital in China within the past two years. According to the Hellenic Center for Investment (ELKE), this has reached 140 million euros from 72 million at the beginning of 2004. The sectors of tourism, transport and logistics, telecommunications, food and beverages, and education offer the best prospects for exchanges between the two countries. According to data supplied by the Greek Embassy in Beijing, the most prominent Greek firms active in China are the following: S&B Minerals in metals; Cosmos Building Materials Shanghai Co and Iktinos in marble; Environmental Protection Technical Co in the production and application of oxides; Folli-Follie and Oxette in jewelry and watches; Lavipharm in cosmetics; Crete Plastics and ETMA in synthetic fibers; and Intralot in telecommunications equipment and software. In all, about 50 Greek firms have set up shop in China. Eurobank has opened an exploratory office, while strong interest is also being shown by shipping companies and steel makers in tapping the potential of the Chinese market. The Chinese economy now is the world’s second-largest after the US, having recorded an average annual growth rate of 9.3 percent since a gradual process of liberalization commenced in 1978. As a result, the living standards of more than 250 million people have risen above the poverty level during this time. China now has a population of 1.3 billion, while its workforce numbers about 800 million and is increasing by 12 million people a year. Inflation is around the 4 percent mark, while industrial production is rising by about 17 percent annually. According to the Hellenic External Trade Board (OPE), China is among the most attractive destinations for investment. It attracted almost 60 percent of the world’s fixed capital investment between 2000 and 2004. Foreign direct capital investment in 2004 reached $60.6 billion. Analysts fear the economy may be at risk of overheating. Measures to stem credit overexpansion, adopted by the central bank in 2004, seem to have had little effect. Chinese exporters remain as competitive as ever and the country’s trade balance was $30 billion in the black last year. Difficulties The complaints of Greek businesspeople venturing into China mostly concern time-consuming procedures and costly red tape, as well as the withdrawal of incentives after an investment has been undertaken. They also report differences in the application of laws between regions, discrimination against foreign investors compared to Chinese state companies, state intervention and monopolies that engage in unfair competition practices. Finally, there is also extensive counterfeiting of products and inadequate application of copyright laws.

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