The FINANCIAL -- China’s Economic
and Commercial Counsellor spoke with The FINANCIAL about the
anti-migration media campaign in Georgia and current perspectives of
postpone your visit to Georgia,” is the warning from Mr Liu Bo,
Economic and Commercial Counsellor of the Embassy of P.R. China in
Georgia, posted on the Commercial Counsellor’s office website. This
statement followed the decision of the Georgian authorities to deny
entry to around 40 businessmen and tourists that was visiting Georgia
back in April 2013.
In April 2013 around 40 businessmen and tourists which flew to Georgia were denied permission to cross the border and had to turn back directly from Tbilisi International Airport , Mr. Liu told The FINANCIAL. The newspaper was able to verify this information with the Ministry of Economy and Sustainable Development of Georgia as well as the Georgian Chamber of Commerce.At present, there is no problem for Chinese entering into Georgia, said Mr Liu Bo.
Both China and Georgia have very long history. In recent years, the economic and commercial relations between the two countries goes on very well. China attachs great importance in investing in Georgia and Chinese government encourages qualified and famed companies invest in Georgia market.
China is in the minority of countries from which the FDI volume to Georgia increased in the first half of 2013, said Liu. The total volume of FDI exceeded USD 92 million from last year’s USD 3.2 million.
“The main reason behind these increased figures is the further investment of Hualing Group which started its operations last year and another business, gold-mine company Guria, that invested in mineral resources,” said Liu.
According to Liu, there are 23 Chinese companies established in Georgia out of which 5 are investment companies, 4 construction, 11 trading, 2 telecommunication and one financial company.
In his words, by the end of 2013, FDI from China will amount to over USD 100 million.
“At the end of 2013 FDI from China will have amounted to USD 100 million. The investment of Hualing Group is predicted to reach USD one billion. At present, the construction work including the 2015 European youth olympic village is going on very smoothly. Hualing will go all their best to build a satisfactory work. Hualing’s investment in Georgia made a great contribution to Georgia, it is a mutual and win-win project.
Two weeks ago the President of Hualing Group visited Georgia. After that the Kazakh Government invited him to their country and asked to invest there. The Georgian Government should support Hualing Group and encourage them to do more here. Hualing has a very diversified business and can, as a company, act in promoting Georgia in China and in the rest of the world,” said Liu.
“Hualing Trade and Industry has big influence. Because of the government change, business delegation’s entrance denial and rumours regarding Hualing Group, many businessmen have cancelled their visits. 20 to 30 years ago China was poor; now we have the second largest economy. The main reason behind this success is the huge amount of FDI that China managed to attract. In the case of Georgia I would say that it is the same. FDI is important for the Georgian economy. The current government noticed a reduction in FDI and now they have become eager to attract investments, I think this is the right step.”
The government has come into power nearly one year, the economy of Georgia is growing step by step although a big decrease in the late of 2012 and earlier 2013. I do believe that the economy of Georgia will be much better in 2014, I also have confidence that more and more potencial Chinese investors will visit Georgia next year, this is good both for China and Georgia, I am very happy to see a win-win situation in the fields of investment as well as trading and construction projects.
Q. In your words, Georgian products, specifically wine, have a huge potential to be exported to China. What would you advise to local producers, how can they succeed on the Chinese market?
A. As living standards in China are improving, their habits are also changing. So, currently Chinese people prefer to drink wine instead of vodka. Therefore I think that Georgian wine has big potential to be exported to China. The good news is that according to Georgian statistics last year more than a million (1.2 million) bottles of Georgian wine were exported to China. When I had my holidays I went back to China and talked to some of my friends who shared their impressions about Georgian wine. They liked it and considered it to be of good quality. If we compare it to French wine of equal quality Georgian wine has the advantage in its lower price. In some cases the quality of certain Georgian wines is even better than that of French ones.
If Georgia wants to increase its export share on the Chinese market I would suggest that Georgian wine producers try to find one dealer, a powerful and qualified partner. Over 80% of the Chinese wine market is already occupied by European, Chilean produce. Georgian wine needs to promote itself. More than 99% of the Chinese population don’t know about Georgian wine. If even 1% of the Chinese population was to become aware of Georgian wine it would mean big success for Georgian producers. The fact is that there are not very many products that can be exported to China besides mineral waters, wine and nuts. Meanwhile we can import various products from Georgia. Georgian products are welcome on the Chinese market. In my opinion exporting beef could prove to be successful.
Q. Did Chinese investments ‘test the limits’ of Georgian hospitality?
A. I have been in Georgia for nearly two years. During this period I have experienced great hospitality from Georgians. In general, Georgians and Chinese people have a lot of similarities. For example, in Georgia it is common for grandparents to take care of their grandchildren, the same as in China, whereas there is no example of a similar tradition in other European countries. On behalf of other Chinese people I would say that Georgians are excellent people. I like Georgians very much.
Earlier this year, after the change of government, two people wrote an article saying that after the completion of Hualing Group’s project, thousands of Chinese people will come to Georgia in five to ten years’ time. They described it as a threat to Georgia. This is completely not true. In regard to this rumor, I arranged various explanatory meetings with the representatives of different sectors. There are several simple reasons for why Chinese people are not interested in mass migration to Georgia. Welfare in China is much better than in Georgia. Georgians retire from work after 67 years and are then eligible to receive a monthly pension amounting to GEL 140. In China this figure is several times higher. Chinese people may come to Georgia and start business here, but the immigration rules are in the hands of the Georgians. So, you control whether or not to accept foreigners. Hualing Group has hired 2,500 local employees. IMF forecasts an increase of unemployment rate to 17.3% for next year, which is the worst result in the CIS space after Armenia. This investment carries mutual benefit for Georgia and China. Now the Georgian Government has understood the problem and started to support the Hualing project.
Q. What is the approximate volume of Chinese investment going to be in Georgia in 2014?
A. Next year there will be more delegations from China to Georgia. The International Leasing company will invest USD 200 million. There are four potential shareholders from China. Last week one of these four visited Georgia, when I asked him to share his view of the country he expressed great satisfaction and a positive attitude.
Q. What is the potential of Georgia as a travel destination for Chinese people?
A. In May of 2012, the Chinese and Georgian governments signed the agreement ADS but besides this few Chinese have visited Georgia. As we see from the official statistics, the main segment of tourists visiting Georgia is from its neighbouring countries. The number of travellers is small, not just from China, but from the rest of Asia. The current year’s figures showed an increase of Chinese visitors in comparison with the previous year. So, I would predict that next year the number will increase even more. Hualing Group is having a big effect on attracting Chinese tourists. The Group has its own tourism agency.
Q. What are the main risk areas that foreign investors face in Georgia?
A. I would describe the main risk areas that foreign investors face in Georgia as these three factors: continuity of policy, stability of the country and predictability of policy, especially economic policy.