Chinese Business Gains Foothold in Eastern Europe

The classroom walls at the Hungarian-Chinese bilingual primary schoolhere are decorated with Chinese calendars and banners. Chinese lanterns hang from theceilings of the main entrance hall. There are stacks of new Chinese language books in thestaff room, provided by the Chinese authorities, who also send two teachers a year,depending on the school’s needs.
Nội dung trích xuất từ tài liệu:
Chinese Business Gains Foothold in Eastern EuropeChinese Business Gains Foothold in Eastern EuropeBUDAPEST — The classroom walls at the Hungarian-Chinese bilingual primary schoolhere are decorated with Chinese calendars and banners. Chinese lanterns hang from theceilings of the main entrance hall. There are stacks of new Chinese language books in thestaff room, provided by the Chinese authorities, who also send two teachers a year,depending on the school’s needs.The school cafeteria, however, serves only local fare. “No Chinese food, at least not yet,”said Viktoria Schaff, one of the teachers.Which is probably just as well, because the makeup of the state-financed school, the onlyone of its kind anywhere in Eastern Europe, has changed a lot since it opened in 2004 inresponse to the growing numbers of Chinese working in Hungary and the rising numberof Chinese companies investing in the region.The first year, there were 86 pupils, all from China or other Asian countries. Of the 229students who started this month, 90 are Hungarian.“More and more Hungarian parents are sending their children here,” Ms. Schaff said.“Their parents see the huge opportunities opening up for them as China becomes moreand more important.”Education is not the only area in which China is making inroads in Central and EasternEurope. From the Baltic states to the Balkans, Chinese companies, flush with money, arebuying real estate and competing for public infrastructure contracts, especially as Polandand Ukraine work at breakneck speed to jointly host the 2012 European soccerchampionship.They also are investing in manufacturing of products like electronics and chemicals togain a foothold inside Europe’s expansive single market.In Poland last year, a Chinese consortium won the contract to construct two sections of ahighway from Lodz to Warsaw. It was not a huge deal, but it was the first time that anon-Polish or non-European company was awarded a contract that will be partly financedby the European Union.“Some Polish companies were not happy,” said Henryka Bochniarz, president of thePolish Confederation of Private Employers. “They said the Chinese were subsidized bythe Chinese government. But frankly, as long as they meet the procurement rules, youcan’t exclude them.”Ms. Bochniarz added that the Chinese companies also hired Polish workers andengineers. Indeed, Chinese companies are becoming increasingly active in Poland, wherethe work force is well educated and still relatively inexpensive compared with WesternEurope.Trade flows have also changed. “China used to mainly export textiles, shoes and tea toPoland,” said Tomasz Ostaszewicz, director of the bilateral economic cooperationdepartment at the Polish Economy Ministry. “Now China is our main supplier ofelectronic goods.”As recently as 2007, Chinese investment in Poland, and across Eastern Europe as well,was insignificant.“Chinese investments in Poland amounted to €70 million in 2007,” or about $92 millionat current exchange rates, Mr. Ostaszewicz said. “The envisaged amount of Chineseinvestment for 2010 could amount to €500 million.” That, he added, would create 3,230new jobs.The investments, which usually take the form of joint ventures, are spread acrossmanufacturing sectors, from electronics and machinery to packaging, plastics and paperproduction.In Hungary, the Wanhua Industrial Group recently acquired a strategic stake inBorsodChem, a leading polyurethane producer in Central and Eastern Europe.Wanhua, which is based in the northeastern city of Yantai, between Beijing andShanghai, is the largest producer in the Asia-Pacific region of isocyanates, a polyurethaneraw material used by the construction and automobile industry as well as for makinghousehold appliances and footwear.The company sells to the United States and Middle East markets, and was looking for apresence in Europe, said Howard Ding, deputy general manager of Wanhua.“BorsodChem gives us a manufacturing base in Europe,” he said. “It means better accessto the European market and better means to serve our customers.”BorsodChem’s headquarters is in Kazincbarcika, a town in northeastern Hungary thatwas built in 1949 as a local center for the newly created fertilizer and chemicalproduction sector. It was privatized in 1991, sold shares to the public five years later andwas bought out in 2006 by two private equity funds, Permira and Vienna CapitalPartners, which began to restructure the company.They then started looking for investors to help pay for the construction of a new plant andto provide much needed capital for a company that is highly leveraged. It has loanstotaling close to €1 billion.In June, Wanhua provided €140 million to complete the construction of a new isocyanateplant. In exchange, Wanhua got a 38 percent stake in First Chemical, the holdingcompany for BorsodChem, and an option to purchase the remaining shares within thenext 24 months.Wolfgang Büchele, the chief executive of BorsodChem, said that without Wanhua, thecompany would have found it very difficult to grow.“We become a member of a groupwith a global view compared to BorsodChem, which is a regional player,” Mr. Büchelesaid. Wolfgang Büchele, the chief executive of BorsodChem, said that without Wanhua,the company would have found it difficult to grow. “We become a member of a groupwith a global view compared to BorsodChem, which is a regional player,” Mr. Büchelesaid.Chinese companies and the Chinese authorities are shopping around in other countries inthe region. Last year, China signed a memorandum of understanding to lend $1 billion toMoldova, one of the poorest countries in Europe. China’s central bank agreed last year toa three-year currency swap of $2.3 billion to Belarus.Ma Changlin, economic and trade counselor at the Chinese embassy in Warsaw, saidChina “is interested in using the re ...