Recently, Ministry of Commerce published their statistics on foreign investment during January to August in Year 2016. We concluded the point as follows.

• The overall foreign investment continued the growth

During January to August 2016, there are 18,538 companies as the newly established foreign-invested enterprises, having an increase of 10.2%. The actual use of foreign investment reached US$85.88 billion, having an increase of 4.5% (excluding data from banking, securities, insurance industry).

• The foreign investment in the service industry kept growth, in which the high-tech services industry was increased significantly

During January to August 2016, the actual use of foreign capital in the service industry was 387.8 billion, having an increase of 10%, taking as the proportion of the national total of 70.7%.

Among them, the actual use of foreign capital in the transportation, warehouse and postal industry reached RMB27, 26 billion, having an increase of 105.5%;

The actual use of foreign capital in the information transmission, computer services and software industry reached RMB39.89 billion, having an increase of 198%;

The actual use of foreign capital in the leasing and commercial services reached RMB64.8 billion, having an increase of 73.4%;

Among the high technology services, the information technology services, the digital content and related services, the research and design services and the transformation of the scientific and technology achievements having the largest increasing.

The actual use of foreign capital in transportation equipment manufacturing and special equipment manufacturing industry was 18.42 billion and 11.78 billion respectively, increased by 16% and 5.2% respectively.

• The main source of foreign investment kept the growth

During January to August 2016, the top ten countries/regions (in actual foreign investment amount) had the actual total investment of 520.12 billion, accounting for 94.8% of the total and having an increase of 5.9%. Among them, the United States of America, Germany, UK and Sweden, had an increase of 79.7%, 79.2%, 96.6% and 48.1% and the investment in such industry having a rapid growth as the information transmission, computer services and software industry, wholesale and retail industry, scientific research, technical services and geological prospecting industry, leasing and business services, financial services and manufacturing industries.

• The foreign investment to the western region had a high growth whilst, there was a large decline in the central region;

During January to August 2016, the actual use of foreign investment in the western region reached RMB 39.35 billion, having an increase of 30.5%. The actual use of foreign capital in the central region reached RMB27.59, having a decline of 41.1%.

• M&A became a main method for the actual use of foreign investment

During January to August 2016, there are 919 companies as the newly establishment of foreign investment enterprises through the way of merging and acquisitions.

Dongjin Comments:

1. Although the global economy is not good, China kept the stable politic environment and had the growth as 7%. China is still a hot spot for international investment;
2. Although the Chinese traditional manufacturing industry met the international standard, its services ability and level was still low in such industry as transportation, warehousing and post industry, information transmission, computer service and software industry, leasing and business service industry. However, there is the strong requirement for high quality service from the Chinese enterprise and consumers and it becomes a big potential market for the foreign investor;
3. In some of the high-tech industry, the China market still has a big gap with the foreign developed countries, e.g. the information technology services, the digital content and related services, the research and design services and the transformation of the scientific and technology achievements. There is still big opportunities in such industry and the foreign investor may take over the market share as soon as possible.

If you have any questions, please send the email to me.

Ms. Jojo Hu

TEL: 0086-21-68868335 ext 324 / FAX: 0086-21-68868021

Email: jojohu@shanghaiinvest.com