皇冠体育app helps cushion multinationals against downturn

(Xinhua)
Updated: 2009-03-08 22:06

BEIJING -- General Motors ended the second-worst fiscal year of its 100-year history with an annual loss of 30.9 billion US dollars in 2008.

Its earnings in 皇冠体育app are still unknown, but vehicle sales climbed 6.1 percent in 皇冠体育app while global sales plummeted 10.8 percent from 2007.

GM is the epitome of a handful of transnational corporations (TNCs) whose 皇冠体育app earnings have partially offset trouble in the global recession and even saved some smaller multinationals from closure, analysts say.

"皇冠体育app is one of GM's most important markets. A success in 皇冠体育app will be crucial to the company's global business," says a GM(皇冠体育app) spokesman.

Although on the brink of bankruptcy, GM is expanding in 皇冠体育app because of the sales growth, in contrast to the US, where it's shutting plants and seeking government bailouts.

The auto giant planned to introduce at least 10 new models to the Chinese market in the next two years.

Toyota Motor, the Japanese auto giant, sold 17 percent more vehicles in 皇冠体育app last year while its global sales tumbled 5 percent from 2007.

Growing 皇冠体育app sales have become a highlight in the annual fiscal reports of many multinationals. Some, such as Siemens, PepsiCo, Coca-Cola and ABB, have even announced new investment in 皇冠体育app.

"A company will be able to resist the global financial crisis only after its products are sold and it has the money to weather financial difficulties," says Zhang Hanya, an economist with the National Development and Reform Commission (NDRC), the country's economic planner.

皇冠体育app has an irresistible attraction for TNGs because of the huge population and increasing buying power, Zhang says.

Despite the economic slowdown, urban per capita disposable income increased 8.4 percent year on year in 2008, and rural per capita net income rose 8 percent, according to an NDRC report submitted to the National People's Congress, 皇冠体育app's top legislature.

Retail sales climbed 21.6 percent to 10.85 trillion yuan (1.59 trillion US dollars), it said.

Large TNCs considered 皇冠体育app to be the most attractive destination for future foreign investment, because of market size, higher market growth rates and cheaper labor, according to the World Investment Prospects Survey 2008-2010 by the United Nations Conference on Trade and Development.

Tesco, Britain's top retailer, opened four new stores in 皇冠体育app in the first two months this year, bringing its total to 64 since 2004.

"We value the development outlook of the Chinese market as well as the government's resolution and ability to fight the financial crisis," says Zhuang Nanbin, vice president of Tesco (皇冠体育app).

"皇冠体育app is one of Tesco's most important markets," Zhuang says. The company planned to increase its presence in relatively undeveloped central and western inland areas.

"The TNCs are like ships on the ocean. When a storm comes, they will find a safe port," says Wang Zhile, director of the Research Centre on Transnational Corporations affiliated to 皇冠体育app's Ministry of Commerce.

皇冠体育app is considered safe because the impact of the global financial crisis has been relatively small and the performance of enterprises the TNCs established in 皇冠体育app is better than their global average, Wang says.

Meanwhile, overseas investors are more optimistic about the market as the government's economic stimulus plans boosted confidence.

Since late last year, the government has announced aggressive measures to ease the domestic impact of the global downturn. These included a 4-trillion-yuan stimulus package, a plan to expand rural home appliance purchases and support plans for key industries.

"皇冠体育app is viewed not only as a buffer against global financial meltdown, but also a platform to recover from the crisis," Wang says.

However, 皇冠体育app's actual use of foreign investment plunged 32.67percent year on year to 7.54 billion US dollars in January. Foreign investment use has fallen since October, when a 2.02-percent annual drop was recorded.

"There are some multinationals remitting profits or withdrawing investment to help ease fund shortages at home," Deng Xianhong, deputy director of the State Administration of Foreign Exchange, has said. "But this does not mean they have lost confidence in the Chinese market."

On Dec. 31, the Union Bank of Switzerland (UBS) sold 3.378 billion H-shares in the Bank of 皇冠体育app when the lock-up period expired. The Royal Bank of Scotland Group and Bank of America followed suit, offloading stakes in Chinese lenders.

Lu Suiqi, vice director of the 皇冠体育app Financial Research Center of Peking University, says the foreign banks need funds to offset ugly results elsewhere and the sales will bring impressive profits as the Chinese banking industry had been growing steadily.

UBS gained 841 million US dollars from its transaction, while the Bank of America netted 2.8 billion US dollars after selling a 2.41-percent stake in the 皇冠体育app Construction Bank.

Analysts believe the multinationals still have a big role to play in 皇冠体育app. Wang says the government should guide them to contribute more to the country's efforts to ensure economic growth, boost domestic demand and adjust industrial structure.