Multinational companies (MNCs) believe they have an important role to play in the grand, China-proposed vision to revive the ancient Silk Road trade routes, as they have the expertise and experience needed by Chinese project contractors. And as China's less-developed regions grow, boosted by the initiative, and as the Chinese market further opens, MNCs believe they will benefit further from the Chinese market and the markets of nearby regions.

Executives of multinational companies meet at the 2015 Global Times Leader RoundTable in Beijing. Photo: Cui Meng/GT

On September 17, executives of multinational companies (MNCs) met at the 2015 Global Times Leader RoundTable in Beijing to discuss China's "One Belt and One Road" (OBOR) initiative.

They agreed it could bring immense opportunities for their businesses, and they generally seek to play active parts in the OBOR's grand vision.

The event was co-organized and moderated by North Head, an independent strategic communications and public affairs consultancy that serves as strategic counselor to the Global Times.

Launched in 2013, the OBOR initiative refers to the Silk Road Economic Belt and the 21st Century Maritime Silk Road.

It is a massive development plan aimed at promoting interconnected infrastructure, as well as economic and cultural exchanges with more than 60 neighboring countries and regions.

Growth opportunities

"As the initiator of the OBOR initiative, China will leverage its resources, both at the central and provincial levels, and from both the State sector and the private sector, to fuel its growth," said Ou Xiaoli, an official with the State Council's OBOR working group office.

"China anticipates reciprocal efforts from countries and regions along the 'Belt and Road', and welcomes the participation of outside countries for growth opportunities," Ou said.

Executives at the "One Belt and One Road" roundtable discussed how OBOR would also bring opportunities for growth to their companies.

"Many OBOR-connected countries are either major producers or major consumers of energy," said Edward Yang Hengming, president of BP China. "Traditional energy firms such as BP are already established and have investments in those countries." 

The OBOR initiative serves as a catalyst for deeper cooperation between BP and Chinese companies, Yang explained, noting that BP has been working with Chinese oil giants in Africa, Southeast Asia, Australia and the Middle East. BP's technical know-how and management expertise perfectly compliments its Chinese partners' high-quality, low-cost services.

Massimo Bagnasco, managing director at commercial building design firm Projetto CMR (Beijing) Architectural Design Consultants Co, agreed that OBOR will bring growth. "The OBOR will improve China's internal network of communication and trade, allowing MNCs to go deeper into China," he told the Global Times. "This process will be a chance to improve relations between foreign international corporations and the local government and help create a more level playing field." 

Bagnasco noted that the current imbalance in railway cargo trade between China and European countries should be also addressed.

With more local companies investing overseas, China's outbound direct investment (ODI) is expected to surpass $1 trillion for the first time in 2015, according to media reports.

The ministry reported on September 16 that non-financial ODI rose 18.2 percent to 473.4 billion yuan ($74.29 billion), for the first eight months of the year.

Chinese companies have already announced or completed 390 deals worth $77 billion this year through September 16, according to a Reuters report Friday. The number of deals are double that of the same period in 2014.

To help finance these projects, 50 prospective founding members of the Asian Infrastructure Investment Bank (AIIB) signed the bank's articles of agreement in Beijing on June 29. The AIIB is expected to be officially established by the end of this year.

Guy Dru Drury, chief representative for the Confederation of British Industry in China, discussed the UK's investment in OBOR.

"By committing the UK to the AIIB back in April, the UK government is also making a commitment to look for partnership and infrastructure development investment opportunities across China and along the OBOR," he told the Global Times.

Drury noted that a British delegation will fly to Urumqi, capital of the Xinjiang Uyghur Autonomous Region, this week in search of opportunities.

"UK could benefit from OBOR by providing designs, consulting, finance and high-tech solutions such as low-carbon and energy-efficient technologies to these regions," he said.

Participation

While there have been many successful projects, Chinese overseas investment has also been marred by failures, as some projects have been grounded or lost money.

Working with MNCs should help mitigate these risks, said experts at the roundtable.

On September 16, China National Machinery Industry Corp and US conglomerate GE signed a memorandum of understanding to cooperate on clean energy projects in Africa, including a 102-megawatt wind farm in Kenya, according to the Xinhua News Agency.

"GE has investment and financing experience in Africa and knows the local commercial and legal environment, giving it a better chance to avoid and mitigate risks," Curtis Wong, chief risk officer of GE Capital in China, told the Global Times on Thursday.

The two companies said their cooperation will support the OBOR initiative and the Power Africa Project, a five-year initiative launched by the US to help African countries get affordable and sustainable power.

In addition to financial institutions such as the AIIB and the $40 billion Silk Road Fund, some provincial governments are considering the establishment of funds to support OBOR projects, Ou said.

Ou suggested that by cooperating with MNCs, the Sino-foreign consortium could explore opportunities to secure offshore loans provided by foreign banks, as borrowing costs in China are quite high.

On September 16, the National Development and Reform Commission told Chinese firms with good credit to issue bonds in cheaper offshore markets, to support domestic investment and major national projects. It said borrowing should support initiatives such as OBOR.

One of the expected results of the OBOR initiative would be further developing China's relatively underdeveloped western regions, which currently have less access to larger markets. Such growth brings other opportunities for companies.

"We have been looking for opportunities to increase our investment in China's western regions, especially in second- and third-tier cities," said Daniel Deng Ning, vice president of business development of tire maker Goodyear Asia Pacific.