Why China is the investment destination of choice for Singapore companies

Off to Chengdu they go.

According to a release,  more Singapore companies and multinational corporations (MNCs) are focusing their investments in China from the east to the western region. China's western region, led by the financial hub of Chengdu, is fast becoming the investment destination of choice for Singapore companies. 

On December 18, 2012, the West China Development Research Center of the Sichuan Academy of Social Sciences (SASS) and the East Asian Institute (EAI) of the National University of Singapore (NUS) issued a joint research report titled “New Opportunities in Western China - Overseas (China) Investment Trend by Singapore Companies”.

According to the report, the Chinese market continues to present exceptional investment potential, and Singapore companies are shifting their investments from the coastal regions of Eastern China to Western China. This trend has contributed to year on year foreign investments growth for cities such as Chengdu and Chongqing, which have been identified by Singapore companies as prime investment destinations. Singapore corporate investments pivoting towards Western China.

According to statistics, Asia was the preferred investment destination for Singapore investors in 2011, accounting for approximately 55.8% (US$227.169 billion) of Singapore’s foreign direct investment (FDI) in 2011. Of these Asian countries, Mainland China, Malaysia and Indonesia accounted for 57% of the total FDI. Apart from Asia, South America, Central America, the Caribbean and Europe are also major investment destinations for Singapore companies.  

The “New Opportunities in Western China - Overseas (China) Investment Trend by Singapore Companies” report shows that amid the global economic crisis, Asia will remain as the key investment ground for Singapore companies as investments continue to grow; and China will be a key target country to invest in.

Judging from the investment figures between January to October 2012, the year-on-year growth in cumulative investments in China’s eastern region is 18.2%, a 4 percent drop compared to the same period in the previous year. The study predicts that Singapore’s investments in the eastern coastal region of China will slow. In contrast, there will be more opportunities in the western region; especially when the western region is clearly growing at a faster pace than the eastern region, Singapore companies will certainly expand their investments in Western China.

The report also shows that Singapore-headquartered MNCs are stepping up on their investment pace in Western China. According to statistics, FDI in western China accounted for 7.9% of the national figure in 2009, a 5.1% jump from 1999, as IT giants, such as Hewlett-Packard, Dell, Intel, Foxconn, Quanta and Acer, relocated westwards from the eastern coastal cities.

International MNCs and household names across various industries like logistics, finance, electronic information, equipment manufacturing, chemicals, automobiles and motorcycles, consumer services and pharmaceuticals, with the likes of BASF, Cisco and Lan Kwai Fong Group, Companies, are continuing to build and expand their presence in western China. Statistics signal that this trend is gathering strength.