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DOING BUSINESS IN CHINA

Foreigners Try to Hitch Ride on ‘One Belt, One Road’

By Doug Young

Charm bracelets, Cabbage Patch Kids and Tickle Me Elmo. I may be dating myself with some of those references, but the point is that when it comes to fads, I’ve seen them all.

And then I came to China, where such fads took on a whole new meaning. No more were the hottest toys and gadgets the center of conversation and front-page news like in my native U.S. Instead, phrases like the “Three Represents” and the “Chinese Dream” took over as centerpieces of daily chatter, pushed by a state-owned media machine that could find magic in even the stodgiest terms like “Asia Infrastructure Investment Bank” and “Shanghai Free Trade Zone.”

And then there was “One Belt, One Road,” a program rolled out around five years ago that was so vague in the beginning that no one was really sure what it meant. The name, now often shortened to just OBOR or “Belt and Road,” centered on two entities. One of those was the storied overland ancient Silk Road that passed through central Asia and ended in the northwestern Chinese city of Xi’an. The other was a lesser-known maritime trading route that connected Europe with China via a sea route that passed around the Horn of Africa.

Over time, I’ve finally come to understand “One Belt, One Road” to mean just about any major project around the world where Chinese companies come in to build infrastructure, mostly for developing countries using China-supplied financing. In my skeptical view, the program seemed to be a way for China to export its infrastructure-building prowess developed over the last two decades under the mantle of being a global program.

There’s certainly nothing wrong with that, I concede. China should be justifiably proud of the thousands of kilometers of state-of-the-art railroads and highways it has built over the last two decades, not to mention the power plants, telecommunications networks and other major infrastructure behind the country’s remarkable transformation over that time.

But to argue its sudden interest in exporting that infrastructure-building prowess to the rest of the world under the cover of “One Belt, One Road” was anything but self-serving seemed just slightly disingenuous.

With that heavy skepticism in mind, I headed to Hong Kong last week to lead a panel at an OBOR forum, where I was quite surprised to learn that more than a few foreigners have become believers in the program and were clamoring to find out how they could benefit. The forum was quite well attended by people from a wide range of industries, with finance, engineering, consulting and legal services all represented on my panel alone.

Place for foreigners?

I won’t say I’ve become an OBOR believer overnight, and still believe this program remains very much led by and for the benefit of China and its companies. But the high level of interest and discussion of some people’s early experience did at least convince me that perhaps there is a place for foreigners at the OBOR table, in terms of getting business for some of its projects.

One of my key takeaways and words of advice for any foreign company looking for a piece of the OBOR pie is to remember that this is and always will be a China initiative first and foremost. The biggest contracts, and lion’s share of the financing for many of its projects, will always come from and be earmarked for Chinese companies.

But that said, there are places where Chinese companies simply don’t have the expertise or skills needed for this kind of massive project in such foreign landscapes. That’s where foreign businesses can add value and get a piece of the action, according to my fellow panelists. Most of them stressed that as with everything in China, this kind of opening won’t just fall into one’s lap.

Sizable investment of time and effort are necessary, often involving setting up some kind of presence in China to figure out where the opportunities are and build the necessary relationships with potential partners. What’s more, a fellow panelist from the engineering sector pointed out that a fact of life for anyone doing business in China also applies when it comes to OBOR. That fact says any foreigners with something to offer today should be prepared to get the boot tomorrow from Chinese partners who are famous for learning skills and then callously dumping their partners by the roadside.

To show that things are really happening, one of my fellow panelists pointed out that a few big names like ABB Group and Honeywell have already found an OBOR-related niche for supplying their infrastructure-related products and services to Chinese companies going abroad. Consultants like McKinsey & Co. and KPMG have also found business offering their services to those same overseas-minded Chinese infrastructure builders, and major law firms have found similar business.

So, assuming you’re a midsize provider of such products and services without quite the reach of a Honeywell or McKinsey, the big question is: Where do you begin to prospect for gold along this 21st century Belt and Road? One fellow panelists offered quite a few helpful tips, including consulting with the many foreign chambers of commerce here in China, led by groups representing American and European Union countries.

Businesses with established connections in non-Chinese OBOR countries, such as Pakistan and Saudi Arabia, could also turn to their local contacts for introductions. Then there are the numerous foreign legal advisors, accountants and financial service providers that are active in China and may be able to make introductions. Finally, some locally based organizations in China could also make such introductions, such as the Export-Import Bank of China or the Hong Kong Trade Development Council.

At the end of the day, I’ll admit I’m still quite a skeptic and wouldn’t be at all surprised if “One Belt, One Road” rapidly fades from the headlines and broader consciousness over the next few years, following the similar fates of Cabbage Patch Kids and the China Dream. But that said, foreign interest in the program caught even a skeptic like me by surprise, and nudged me just a tad closer to being a believer.

Doug Young has lived in Greater China for two decades, including a 10-year stint at Reuters, where he led China corporate news coverage. Send your questions or comments to DougYoung@caixin.com

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