China rust belt opens door wider to foreign investors

The EU business chamber has observed an uptick in foreign entrepreneurs arriving in Shenyang in recent years. Above, workers manipulate a machine to produce car interior pieces for a major European carmaker. (AFP)
Updated 24 September 2017
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China rust belt opens door wider to foreign investors

SHENYANG, China: Trucks carrying hi-tech car components rumble in and out the gates of an American industrial zone in the heart of China’s rust belt — using roads that the city especially renovated for the complex.
While foreign firms complain about being locked out of large swathes of China’s vast market, the door has cracked open a bit wider in northeastern Liaoning province as the authorities seek to revive the recession-hit industrial region.
The bustling activity at the Shenyang American Industrial Park, which hosts international suppliers for global car brands, stands in contrast with the darkened windows and empty parking lots of the moribund Chinese factories nearby.
Foreign firms feel more welcome in the provincial capital, Shenyang, and in parts of the southwest, than anywhere else in the country, according to a survey by the European Union Chamber of Commerce in China.
“The local government offers many benefits, such as easing company registration, providing discounts for factory and office space and giving family members three-year visas,” said Harald Kumpfert, chairman of the EU chamber’s Shenyang chapter.
Elsewhere, companies are increasingly voicing frustration about investment barriers in sectors from automotive to finance, while China subsidizes its own domestic businesses.
The EU business chamber issued an annual report on Tuesday saying companies were “suffering from accumulated ‘promise fatigue’” as the government has yet to follow through on pledges to open the market.
And while Liaoning is more welcoming, Kumpfert said that after setting up shop, businesses in Shenyang face similar obstacles, including lengthy waits for permits and “unclear” regulations.
Settling in China can also come at a price: at least one-fifth of EU companies said they have had to share their technology in exchange for market access in the aerospace, machinery, environment, auto, utilities and primary energy industries.
Still, the chamber has observed an uptick in foreign entrepreneurs arriving in Shenyang in recent years.
Businesses that specialize in renewable energy, tourism, agriculture or advanced technology are well positioned to succeed in Shenyang as the city addresses pollution and undergoes a “painful restructuring process”, Kumpfert said.
The Liaoning Pilot Free Trade Zone was launched earlier this year, and construction continues in the 48-square-kilometer Sino-German Intelligent Equipment Manufacturing Park in Shenyang, which hosts BMW, Siemens and BASF.
The city’s Bureau of Foreign Trade and Economic Cooperation said data on foreign investment was not immediately available.
China’s northeast has long relied on state-owned enterprises plagued with severe overcapacity in heavy industries that have crippled the economy, costing thousands of jobs.
Liaoning was the only province in the country that was officially in recession in 2016, with its economy contracting by 2.5 percent. The province also admitted to faking economic growth figures from 2011 to 2014.
“All these government projects have ignored principles of supply and demand and created all these problems,” said Jason Lee, a director of business development for Eastern America, which bought the land from the city to build the Shenyang American Industrial Park.
“Nowadays, there is more government support for foreign businesses here. There’s a lot to catch up on, but now they want to work with us as a team,” Lee told AFP, adding that city officials sometimes accompany him to meetings to woo foreign clients.
A Shenyang car insulation factory manager, Li, is pinning his hopes on foreign capital to help the region.
“If more people come and invest, then the whole environment will improve. Employment, revenue, and other aspects will all get better,” said Li, who declined to give his first name because he was not authorized to speak with the media.
But at the Shenyang German Sino-Service Center, most of the offices in a new building were recently empty, showing that the process can still be slow.
Wolfgang Wagner, chief operating officer of the center, says it was not out of lack of interest — two dozen foreign companies have applied to join but they have struggled to get legal permits to allow them to rent in a government-owned building.
“First we thought they could move in 2018,” he said. “Now it’s not going to be until 2019.”


Danske Bank money laundering ‘giga scandal’ spreads to Britain

Updated 21 September 2018
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Danske Bank money laundering ‘giga scandal’ spreads to Britain

  • By 2013, the number of UK-registered customers in the branch’s non-resident portfolio had topped 1,000
  • Danske Bank Chairman Ole Andersen said that the lender had made an assessment of whether it violated any US laws
LONDON/COPENHAGEN: Danske Bank’s money laundering scandal spread on Friday as Britain’s National Crime Agency (NCA) said it is investigating the use of UK-registered companies.
“This is a giga scandal,” European Union Competition Commissioner Margrethe Vestager said, joining a growing chorus of calls for a clampdown on the billions of euros which are alleged to have been “washed” through European banks.
An NCA spokeswoman said the British agency was working with partners across government to restrict the ability of criminals to use UK-registered companies in money laundering.
British and Russian entities dominate a list of accounts used to make €200 billion ($236 billion) in payments through Danske Bank’s branch in Estonia between 2007 and 2015, many of which the bank said this week are suspicious.
By 2013, the number of UK-registered customers in the branch’s non-resident portfolio had topped 1,000, Danske Bank’s investigation revealed, ahead of clients from Russia, the British Virgin Islands and Finland.
As the scope of the alleged money laundering through Danske Bank has widened, investor concerns over the potential penalties it could face have increased, with particular focus on what action if any US authorities might take against the bank.
So far, the US has not said whether it is investigating, although Danske Bank Chairman Ole Andersen said that the lender had made an assessment of whether it violated any US laws. He has declined to share the bank’s conclusion of this.
“We need to do more to prevent money laundering from happening,” Vestager told reporters in Copenhagen following the resignation on Wednesday of Danske Bank CEO Thomas Borgen after an investigation commissioned by the bank exposed past control and compliance failings.
Borgen, 54, was in charge of Danske Bank’s international operations including Estonia between 2009 and 2012.
He said on Wednesday that he had been “personally cleared from a legal point of view” while Danske said its board had not breached their legal obligations.
The European Commission last week recommended banking supervision changes, including bolstering national authorities, but stopped short of setting up a new financial crime agency called for by the European Central Bank.
In a sign of the growing pressure on Danske Bank, which already faces criminal inquiries in Denmark and Estonia, the chief executive of CARE Danmark said on Twitter that the Danish charity had decided to end its relationship with the lender.
International aid charity Oxfam also called on Danish municipalities to cut ties with the bank, saying it has not been able to re-establish the trust of Danish citizens.
The mayor of Aalborg, Denmark’s third largest municipality, said he would discuss its partnership with Danske Bank at the next municipality committee meeting, but noted that there were only two banks in Denmark would be able to handle a municipality its size.
“Danske Bank has been involved in money laundering which is deeply reprehensible and outrageous but Nordea has been involved in tax havens, so the entire bank sector needs to clean up for us to have a trusting collaboration with the banks,” Thomas Kastrup-Larsen said.
Danske Bank’s tiny Estonian branch accounted for as much as 10 percent of group profit during the period when suspected money laundering was conducted via its operations there.