China's economy is growing rapidly, and world experts expect China to overtake the United States in terms of GDP per capita by 2032. All of this only increases the interest of Ukrainian business in cooperation with Chinese investors. Moreover, China has been a capital net exporter for several years now, since the volume of investments abroad exceeds foreign direct investment in China.
Investing in foreign business enables China to strengthen its own economy, as well as strengthen its influence in other countries. On one hand, the Chinese growth strategy of Going Global encourages investment in foreign markets, so companies are expanding their presence actively and are investigating investment opportunities in a number of sectors. But, on the other hand, the Chinese authorities are already worried about the outflow of capital from the country and are beginning to tighten oversight of the investment flows, which leads to the reduction in total investment amount from the country’s side. Potential investors began to take a more cautious approach to the selection of countries/facilities for financing, carefully assessing economic and geopolitical risks.
China's investment statistics divide investment flows into financial investments, construction investments, as well as investments that fell short after entering a commercial agreement (bad investments).
From 2005 through 2019, the CGIT contains more than 1,600 investments worth $1.2 trillion. It includes 1,700 construction projects worth more than $800 billion. There are 300 troubled transactions valued at close to $400 billion, in which investment or construction was impaired or failed after a commercial agreement was finalized. $9 billion or 1% of total Chinese outward investment has been invested in the Ukrainian economy during 2005-2019.
Chinese Outward Investment Flow in 2005-2019
|
Period |
CGIT ($ Billion) |
MOFCOM Headline ($ Billion) |
CGIT Growth (Percentage) |
MOFCOM Growth (Percentage) |
|
2005 |
10,2 |
12,3 |
н.д. |
н.д. |
|
2006 |
20,3 |
21,2 |
+99 |
+72 |
|
2007 |
30,1 |
26,5 |
+48 |
+25 |
|
2008 |
56,3 |
55,9 |
+87 |
+111 |
|
2009 |
56,1 |
56,5 |
-1 |
+1 |
|
2010 |
66,0 |
68,8 |
+18 |
+22 |
|
2011 |
70,3 |
74,7 |
+7 |
+9 |
|
2012 |
78,5 |
87,8 |
+12 |
+18 |
|
2013 |
80,8 |
107,8 |
+3 |
+23 |
|
2014 |
102,5 |
123,1 |
+27 |
+14 |
|
2015 |
117,9 |
145,7 |
+15 |
+18 |
|
2016 |
158,2 |
198,2 |
+34 |
+36 |
|
2017 |
175,6 |
158,3 |
+11 |
-20 |
|
2018 |
115,2 |
143,0 |
-34 |
-10 |
|
2019 |
68,4 |
124.3 |
-41 |
-4 |
|
ВСЕГО |
1 206,4 |
1 398,9 |
n/a |
n/a |
* Source: The China Global Investment Tracker, China’s Ministry of Commerce (MOFCOM)
Chinese Outward Investment Flow in 2005-2019 by Sectors
|
Sector |
Investment, $ bln |
Construction, $ bln |
Troubled, $ bln |
|
Energy and Power |
392,1 |
335,4 |
139,6 |
|
Metals |
147,5 |
35,9 |
70,1 |
|
Transport |
129,9 |
249,9 |
53,2 |
|
Real Estate |
102,3 |
90,7 |
21,0 |
|
Agriculture |
83,5 |
16,5 |
12,4 |
|
Finance |
80,8 |
N/A |
41,4 |
|
Technology |
61,2 |
16,6 |
28,6 |
|
Entertainment |
43,7 |
2,7 |
6,8 |
|
Tourism |
42,8 |
8,7 |
7,5 |
|
Logistics |
34,6 |
5,3 |
1,8 |
|
Health |
22,4 |
3,4 |
0,5 |
|
Chemicals |
12,6 |
20,8 |
2,0 |
|
Other |
52,1 |
43,6 |
5,9 |
|
Total |
1 206,4 |
829,2 |
390,7 |
* Source: The China Global Investment Tracker
Prospects and potential of capital outflow from China
Over the course of several years, the direct investment that China channeled to the US economy has been growing steadily and reached a record $ 46 billion in 2016, providing more than 140,000 jobs for Americans, but investment has decreased by almost 10 times by the end of 2018. Against the backdrop of the trade war between China and the United States lasting several years, Chinese investors may utterly have a need to look for new cooperation platforms.
At the end of 2019, Donald Trump agreed to sign a trade deal, which should put an end to the confrontation between the largest giant economies and determine the rules for trade relations with China. Many journalists have already called this agreement "China's surrender", since the Chinese side has agreed to change its trade surplus in favor of the United States by hundreds of billions of dollars, and also accepted all the duties put on their goods. Despite the signing of the trade deal, the penetration of Chinese goods into American markets is still blocked, especially at the local level.
Nevertheless, this state of affairs does not preclude the emergence of interest among Chinese investors in the search for new markets and investment opportunities.
Ukraine attracts China primarily by its proximity to European markets, the ability to begin directly the assembly/production of goods in a large number of factories that are located on the territory of our country.
The main fields of activity in Ukraine that are of interest to Chinese investors include: renewable energy, transport and logistics, agricultural sector, construction.
Successful major investment deals in the Ukrainian economy of Chinese investors
|
Year |
Chinese Investor |
Amount of investment |
Ukrainian Party |
Sector |
Investment project |
Investment status |
|
2019 |
China Energy Engineering |
$150 mln |
Power economy |
Chinese company should set up a garbage disposal plant near Kyiv |
Implementation phase |
|
|
2019 |
Skyrizon |
$100 mln |
Motor Sich |
Transport sector |
The Chinese acquired Motor Sich enterprise |
The deal went through |
|
2019 |
4 unidentified companies |
$200 mln |
Chortkiv-West |
Food industry |
Corn mill |
Implementation phase |
|
2019 |
Bohai Commodity Exchange |
n/a |
PFTS Stock Exchange |
Stock Exchange |
Chinese company bought 49,9% of stock shares. |
The deal went through |
|
2019 |
SkyWell |
n/a |
Industrial sector |
SkyWEell company plans to set up a plant for the production of electrobuses in Ukraine. |
Implementation phase |
|
|
2019 |
Power China |
$115 mln |
Power economy |
Chinese company in conjunction with the Norwegian Scatec Solar are building a solar power station in Mykolaiv region |
Implementation phase |
|
|
2018 |
Sinomach |
$210 mln |
DTEK |
Power economy |
DTEK and a Chinese company agreed to build jointly a 200 MW power plant. |
Implementation phase |
|
2018 |
Xinjiang Beiken Energy Engineering |
$120 mln |
UkrGas |
Power economy |
UkrGas and the Chinese signed a contract for joint drilling operations. |
Implementation phase |
|
2018 |
China Energy Engineering |
$250 mln |
Metropoliya |
Power economy |
n/a |
|
|
2018 |
Power Construction Corp |
$340 mln |
NTB |
Power economy |
The Chinese, together with a Norwegian company, plan to build wind farms in the south of Kherson region |
Implementation phase |
|
2018 |
Dongfang Electric |
$340 mln |
Donbasenergo |
Power economy |
Most likely, this is a joint reconstruction of a TPP in Slovyansk with DonbassEnergo |
Implementation phase |
|
2018 |
CNEEC |
$500 mln |
Ukrgasbank |
Power economy |
Chinese investors transferred Ukrgasbank a loan of $ 500 million for the construction of the Dniester hydroelectric station |
The project has been implemented |
|
2017 |
Xinjiang Communications Construction |
$100 mln |
Transport sector |
Most likely, it is a contract for the construction of roads in Ukraine. |
The project has been implemented |
|
|
2017 |
Fanda |
$50 mln |
Agribusiness |
Vegetable processing plant |
Implementation phase |
|
|
2017 |
China Road Brige Corporation |
300 mln |
Infrastructure |
The bridge in Kremenchuk |
Implementation phase (slim chances) |
|
|
2017 |
Xinijang Communications Construction Group |
$38,5 mln |
Infrastructure |
Chinese company acted as a contractor of M12 road repair |
Implementation phase |
|
|
2017 |
Sinohydro Corporation |
$42 mln |
Infrastructure |
The Chinese act as the contractor of the repair of the bypass road in Zhytomyr |
Implementation phase |
|
|
2017 |
Guangdong Vanvard New Electric Co |
n/a |
Bosch |
Industrial sector |
It is planned to create a joint gas event |
Implementation phase |
|
2017 |
Unidentified Chinese company |
Digital Future |
IT |
Chinese company bought out a part of shares in YouAppi project |
The deal went through |
|
|
2017 |
Bohai Commodity Exchange |
$3 mln |
Ukrainian Bank for Reconstruction and Development |
Banking sector |
China Exchange acquired Ukrainian Bank for Reconstruction and Development |
The deal went through |
|
2016 |
China National Building Material |
$180 mln |
Activ Solar |
Power economy |
Chinese company bought a number of solar power plants in the south of Ukraine from Klyuyev brothers. |
The deal went through |
|
2016 |
Cofco Corporation |
$75 mln |
Agribusiness |
Chinese company launched terminal for transshipment of grain and oil crops |
The project has been implemented |
|
|
2016 |
Beijjing Skyrizon Aviation Industry Investment Co Ltd |
Industrial sector |
The Chinese have opened a joint venture with Motor Sich in China. In addition, a Chinese company has invested $ 100 million in Ukraine’s industry, they may invest $ 150 million more. |
Implementation phase |
||
|
2015 |
CNBM |
n/a |
Activ Solar |
Alternative energy |
Solar power plants |
Implementation phase |
|
2014 |
Fanda |
$58 mln |
Agribusiness |
|
Implementation phase |
|
|
2013 |
Minmetals |
$250 mln |
Donetsksteel |
Metal production |
Chinese company funded the construction of a mining camp at the Pokrovs’ke mine |
n/a |
|
2013 |
Beijjing Interoceacin Canal |
$3 mln |
Infrastructure |
Megaport in Crimea |
The project has not been implemented |
|
|
2012 |
Chinese Export-Import Bank |
$372 mln ($52 mln gained) |
Infrastructure |
Air express to Boryspil airport |
The project has not been implemented |
|
|
2012 |
Chinese state-owned corporation CCEC |
$500 mln |
Ukreximbank and State Food and Grain Corporation of Ukraine |
Agribusiness (loans) |
The Chinese provided SFGCU with a loan, which was lodged in Ukreximbank |
The project has not been implemented |
|
2011 |
Sinomach |
$2370 mln |
Transport sector |
The company signed a contract for the construction of "Air Express" to Boryspil airport |
The project has not been implemented |
|
|
2011 |
Sinomach |
$250 mln |
Agribusiness |
Details unknown |
n/a |
|
|
2011 |
Sinomach |
$1160 mln |
Power economy |
Details unknown |
n/a |
|
|
2011 |
Sinomach |
$1500 mln |
Power economy |
The Chinese signed a contract for the construction of a gas power station in Crimea |
The project has not been implemented |
|
|
2011 |
Sinohydro |
$1440 mln |
Power economy |
There is no exact information. It could be a finishing constructing of Kaniv PSPS or the construction of a PSPS in Crimea. Or it is about a project which details were not disclosed. |
The project has not been implemented (Kaniv PSPS and PSPS in Crimea have not been constructed) |
|
|
2008 |
Sinoma |
$210 mln |
Lafarge |
Real estate sector |
A Chinese cement manufacturing company invested in Lafarge Ukraine (crushed stone production) |
The deal went through |
* Source: InVenture Investment Deals Database
Investment opportunities for Chinese investors in Ukraine
InVenture is ready to offer full support to Chinese investors in finding entry into promising investment projects in Ukraine.
There may be highlighted some priorities that may spark interest:
- Agricultural companies in the field of farming (growing grain and oil crops)
- Livestock enterprises
- Port terminals, elevators and logistics complexes
- Enterprises in the field of agro-processing
Potential Agricultural (Farming) Targets for Acquisition in Ukraine
|
Region |
Land bank, ha |
Soil Bonitet |
Agricultural machinery |
Elevators and warehouses, tons |
Price, $ |
Price for the land usage, $ per ha |
|
$50 mln + |
||||||
|
Khmelnitsky, Chernivtsi |
62 000 |
45-65 |
+ |
237 000 |
138 000 000 |
1 250 |
|
Kharkov, Poltava, Cherkassy |
40 000 |
50-65 |
+ |
166 000 |
60 000 000 |
1 150 |
|
Chernihiv |
43 000 |
50-60 |
+ |
105 000 |
68 000 000 |
1100 |
|
$10 mln + |
||||||
|
Chernihiv |
8 000 |
45-65 |
+ |
65 000 |
20 000 000 |
1 300 |
|
Chernihiv |
9 500 |
55-70 |
+ |
9 500 |
18 600 000 |
1 500 |
|
Chernihiv |
15 000 |
55-60 |
+ |
63 000 |
35 000 000 |
1 000 |
|
Kirovograd |
12 300 |
55-65 |
+ |
30 000 |
21 000 000 |
1 150 |
|
Rivne |
9 300 |
35-60 |
- |
- |
9 300 000 |
1 000 |
|
Chernihiv |
7 300 |
45-60 |
+ |
14 500 |
10 500 000 |
1 200 |
|
Zhytomyr, Vinnitsa, Khmelnitsky, Ternopol |
18 000 |
40-70 |
+ |
50 000 |
35 000 000 |
1 200 |
|
Kirovograd |
8 600 |
55-60 |
+ |
10 000 |
14 000 000 |
1 100 |
|
Nikolaev |
9 000 |
45-55 |
+ |
71 000 |
12 000 000 |
700 |
|
Nikolaev |
13 000 |
45-55 |
+ |
42 000 |
23 000 000 |
- |
|
Zhytomyr |
7 600 |
45-55 |
+ |
- |
6 000 000 |
700 |
|
$1 mln + |
||||||
|
Kiev |
4 200 |
65-70 |
+ |
10 000 |
8 000 000 |
1 350 |
|
Kiev |
3 000 |
40-70 |
- |
- |
3 000 000 |
1 000 |
|
Cherkassy |
2 500 |
45-60 |
+ |
- |
4 000 000 |
900 |
|
Odessa |
2 000 |
50-60 |
+ |
- |
1 500 000 |
500 |
|
Zhytomyr |
2 500 |
40-50 |
+ |
- |
4 300 000 |
700 |
|
Zhytomyr |
2 000 |
40-50 |
- |
- |
1 700 000 |
800 |
|
Khmelnitsky |
1 030 |
65-70 |
- |
- |
1 400 000 |
1 200 |
|
Kiev |
800 |
45-65 |
+ |
- |
1 200 000 |
900 |
|
Lvov |
670 |
65-70 |
+ |
- |
1 600 000 |
1 500 |
* Source: InVenture Agriculture Targets Database
There is also great investment opportunity in the field of meat processing in Ukraine for Chinese investors - large modern meat processing plant with export-orientated production (pork, cattle, poultry).
The meat processing plant is engaged in the manufacture and sale of pork meat, cattle, poultry and meat products: sausages, semi-finished meat products, canned goods.
The company has a full production cycle: from slaughtering cattle, carving, meat and various meat products manufacture, to sales through its own retail chain.
The meat processing plant’s production capacity and access to the region’s raw material base allows us to consider the asset as an attractive investment offer from the point of view of developing an export-oriented enterprise to meet the increased demand for pork in China, as well as exporting meat and meat products of cattle and chicken.
Meat processing facilities:
|
Name of the Department |
Production capacity, per day |
Maximum production capacity, per day |
|
Slaughter department (pigs) |
52,8 t / 480 heads |
330 t / 3 000 heads |
|
Slaughter department (cattle) |
4 t / 10 heads |
540 t / 1 500 heads |
|
Slaughter department (chickens) |
45,6 t / 15200 heads |
- |
|
Sausage making department |
1,44 t |
15 t |
|
Canning department |
3,84 t |
7,9 t |
|
Meat boning department |
30,24 t |
47,5 t |
|
Productive capacity of refrigerating rooms |
no data |
170 t |
|
Productive capacity of cooling rooms |
no data |
110 t |
|
Capacity of frozen meat storage rooms |
no data |
4200 t |
|
Capacity of chilled meat storage rooms |
no data |
200 t |
Additional information will be provided by request: +38 067 713 65 71 / E-mail: [email protected]
Prospects for investment cooperation between Ukraine and China
In July 2019, Chinese businessmen met with the President of Ukraine, at which they agreed to implement a number of joint projects with a potential of about $ 10 billion. The projects were to be coordinated by the National Investment Council. Nevertheless, we do not see significant real steps in the development of Sino-Ukrainian relations up to this day, moreover, we observe the absence of a clear strategy for working in this direction – there is no Ukrainian ambassador to China, the head of the inter-parliamentary friendship group is not appointed, etc.
It is known that the President of Ukraine, Volodymyr Zelensky planned to visit Southeast Asia in 2020, it is possible that during the visit questions of prospects for Ukrainian-Chinese cooperation will be also considered.
Chinese, as well as other foreign investors, are turned off by the negative experience of investing in Ukrainian business, the inability to withdraw funds/exit the project without financial losses, features of tax legislation, corruption, the specifics of our worldview, lack of government guarantees, lack of qualified specialists. Therefore, comprehensive programs are needed to improve the investment climate of Ukraine and the country's image in the court of foreigners.
And Ukrainian entrepreneurs who would like to attract Chinese investors often lack the knowledge to make a good offer. There are no entry points for contacting potential investors, as well as due to the lack of government support programs that could help them in this.
In this regard, it is necessary to adopt positive experience of those entrepreneurs who have managed to establish cooperation with Chinese investors.
You can also contact the investment company InVenture, which has extensive experience working with Chinese investors and will support to cooperate between Chinese investors and Ukrainian companies.
