How to attract investments from China to the Baltic Sea Region?

The biggest Investment Promotion Agencies (IPAs) from all parts of the Baltic Sea Region (BSR) met 8 February to discuss how to attract investments from China to the region’s countries and metropolis in the best possible way. The City of Hamburg and Hamburg Business Development Corporation were kind hosts of the BSR IPAs meeting which was the second out of six to be organized within the ONEBSR project.

The objective of all six meetings is to exchange best practice and information on how the investment promotion work is organized and ultimately find areas where the IPAs, through joint efforts, can increase their success in investment promotion. All the IPAs in the BSR see Chinese investments as a high priority and on distant markets such as the Chinese market, it was often obvious that there were benefits from working together in attracting investors and doing market research together.

The presentations and discussions mainly addressed the opportunities and hurdles related to Chinese investment relations, both on a regional (BSR) and country level. China was known to use its trade relations as a foreign policy tool, therefore the role of high level political contacts was taken up.

Two brief papers on Chinese FDI were produced in advance of the meeting, providing a good background to the discussion. The participating IPAs had provided information on the successful Chinese investments in the region which helped BDF and the researchers to present at picture of the present situation.

As a part of the main conclusions from the meeting, five recommendations were given on how to improve investment relationship with China:

  1. Build good relationships with Chinese partners, notwithstanding what happens in other parts of the relationship. Political contacts play an important role, and frequent high-level visits matter in China.
  2. Target bilateral contacts at the local level. Some Chinese provinces are the size of European countries, and thus these relations need to be nurtured directly. Studies show an increase in trade with the addition of extra consulates, the development of partner cities schemes, and the multiplication regional bilateral contacts.
  3. From small beginnings come great things. Attracting the first Chinese investment really matters. According to a new report by the European Chamber of Commerce in Beijing, 82% of Chinese investors in Europe want to reinvest in the continent, so encouraging even modest initial deals can start a snowball effect with long-term benefits.
  4. Private and public capital attraction requires different sets of skills and strategies. Private owned companies often have much less knowledge about going international and needs specific nurturing on European conditions.
  5. Understand the learning curve. For Chinese companies, investing in Europe can sometimes prove extremely difficult, due to environmental, social and labour legislations that have to be taken into account. A concerted EU effort to address this issue would significantly facilitate future Chinese investments in the

CEO of Investment and Development Agency of Latvia, Mr Andris Ozols, invited all the IPAs to meet next time in connection with the Baltic Development Forum’s Summit 29-30 May in Riga, Latvia. There was agreement to enlarge the group with sub-regional investment promotion organisations.

The meeting agenda in Riga will cover attraction of investments within the IT sector and cross border clusters since many of the countries in the BSR have a lot to offer in the IT sector to foreign investors. BDF’s Summit will address competitiveness, investment and business development which could have added value to the IPA group discussions. For more information on the Summit, please see www.bsr2013.eu

Baltic Development Forum and its project partners Greater Helsinki Promotion, Invest Gdansk and Riga City Council are responsible for the IPA cooperation within the ONE BSR project.