What is China buying these days ? The Chinese Shopping Spree

Prepared by Eric Chua, eric.chuakh@yahoo.com

What is China buying

• Top imports are Energy, Metal, Transport and Property

The wealth effects of China,Not Yen but RMB• In the 1980s, a string of purchases

of iconic U.S. assets by the Japanese – from Rockefeller Center to the Pebble Beach golf course. A similar wave is now under way.

• Chinese firms now own IBM's personal computer division, Volvo, the AMC movie theater chain, and Virginia-based pork producer Smithfield, as well as large stakes in Devon Energy and Chesapeake Energy, two of the biggest U.S. natural gas and oil companies.

Why buy the products if you can buy the source

• With more than a billion people, China has a chronic need for raw materials and energy.

• Many of its acquisitions are in those industries, such as Canadian energy giant Nexen, oil and gas pipelines in Central Asia, and mineral mines in Australia and Africa.

• Growing Chinese middle class also has a fondness for French wine, so Chinese investors have been snapping up vineyards in Bordeaux.

• Pork is China's most popular meat, and the country hasn't been able to meet domestic demand since 2008 — hence a Chinese meat producer's recent $4.7 billion purchase of Smithfield, the world's biggest pork producer.

• Acquiring foreign companies also gives China a quick infusion of badly needed technological know-how.

Corporate China FDI, 2012

• Top inflows to Canada, US and Australia

• This has direct impacts on properties, education as Chinese tends to invest in countries that they are familiar with

What are China Chinese BuyingInteresting Theme 1/4 - China Online Network + Money markets

• Alibaba's Online Money Market Fund Yu’E Bao, an investment product offered through the Chinese e-commerce giant Alibaba Group Holding Ltd.'s third-party payment affiliate, Alipay.com

• Launched just nine months ago, Yu’e Bao now has more investors than China’s equity markets.

• The mainland's biggest online money market fund had attracted more than 81 million investors by the end of February and had accumulated at least 500 billion yuan ($81 billion) in deposits by the second week of March.

• When an ordinary demand deposit in savings accounts at major banks offers an interest rate of just 0.35 percent a year, and Yu’e Bao offers an annual 6 interest.

What are China Chinese BuyingInteresting Theme 2/4 - Luxury Goods + Wine

• HK has become a shopping paradise due to variety but more due to taxes

• Tax efficiency always create price arbitrage and business opportunities

What are China Chinese BuyingInteresting Theme 3/4 - Properties

What are China Chinese BuyingInteresting Theme 4/4 - Education

Just for fun. What next, durian ?

• Demand from China push up prices. Internet platform, Alibaba has 400 suppliers of durians.

Is Indonesia the next China in waiting ?