(Yicai Global) May 4 -- "The LiuGong 928E rapid excavator is in Istanbul." "The LiuGong Polish-made 925E crawler-type hydraulic excavator has arrived in Belgium."
All these messages come from Howard Dale's WeChat circle of friends.
Dale is sales director of Dressta Co., a wholly-owned subsidiary of Poland's Huta Stalowa Wola SA (HSW). Chinese machine equipment manufacturing industry leader Guangxi LiuGong Group Co. acquired Dressta for USD73 million (CNY500 million) n 2012.
This acquisition represented the first project for privatization of state-owned assets in Poland in which a Chinese enterprise partook and is also the largest investment a Chinese company has ever made in Poland.
Dale had just been 'poached' to take charge of market promotion and marketing early in 2015 when Yicai Global visited LiuGong's plant. Over the past 2 years, Yicai Global has monitored the dynamics in his WeChat circle of friends, perceiving the global spread of LiuGong which laid out its global master plan 10 years ago.
"In recent years, LiuGong has actively worked on strategic planning in countries along the One Belt, One Road, which has moved toward an increasingly mature phase. In the meantime, based on LiuGong Dressta Machinery Co., Ltd., LiuGong's European headquarters were established, integrating its European research and development center and procurement center in a bid to facilitate localization decision-making, coordinate available resources and bring advantages into play to the fullest degree." Hou Yubo, deputy manager of LiuGong Dressta Machinery said to Yicai Global about the company's progress in countries along the Belt and Road.
Whether in trade with western Europe or infrastructure development in eastern Europe, support from Chinese power is indispensable.
China's imports and exports with Russia, Pakistan, Poland, Kazakhstan and India witnessed an increase rate of 37, 18.7, 19, 69.3 and 27.7 percent, respectively, in this year's first quarter, data from the General Administration of Customs shows. China also saw rising trade with the EU and ASEAN countries, up by 16.9 percent and 25 percent, respectively by the end of June 2016.
Freight trains departing from China totaled 1,881, with 12 European cities -- including London -- as destinations and up to 39 running routes. Compared with figures about primary terminal or transfer cities in of China-Europe trains when Yicai Global visited countries such as Germany and Poland in 2015, these achievements boasted multiplied growth, per information from China Railway Corp.
UK to Offer Financing
Amid the political and economic landscape of Brexit, the UK hopes to provide support for financial development of the Belt and Road by establishing a mature financial services network.
Its geographical location makes the UK seem to be from the One Belt, One Road. However, it is the first western developed country which has applied to join the Asian Infrastructure Investment Bank (AIIB). That is because 'British people all along eyed the unlimited business opportunities this initiative would bring to the UK earlier than others.
A China-Europe train running from Yiwu in China's southeastern Zhejiang province arrived in London's Barking train station after 17 days of a 12,451-kilometer mileage early in 2017. This UK-bound Chinese freight train was viewed as a new step between the two sides in One Belt, One Road cooperation.
Loaded with 34 containers, the freight train left China from AlaShankou customs in Xinjiang, China, by way of Kazakhstan, Russia, Belarus, Poland, Germany, Belgium and France, finally arriving in London through the English Channel tunnel. After three months there, it returned to Yiwu from London.
"The UK is greatly in favor of UK-China freight business by railway transportation. Under the circumstance of Brexit, they need more commercial partners to establish deepened and more solid trade relationship with countries outside the EU." Gan Long, operation manager of 123 Transportation Co. in charge of the running of the Yiwu-London train said in an interview with Yicai Global. The China-Europe train to London may not yield obvious benefits to trade between the two countries in the short term, in his view. However, seen from the long-term perspective, such a transportation means featured by less time and low freight costs will be highly favored by a wealth of Chinese and British enterprises.
In fact, the symbolic significance of the freight train to the UK in its engagement in the One Belt, One Road far outweighs its practical implication. After all, the UK can take a more powerful role in financial services.
"The One Belt, One Road is inspiring, and the UK -- especially London -- has a developed financial system, which can provide necessary financial services and adequate capital for investments in countries alongside the Belt and Road, such as infrastructure, and this is also why London is special," Sherry Madera, an Asian affairs ambassador to the City of London, told Yicai Global.
"As the top international financial center, London is continuously expanding its financial market and services in countries along the Belt and Road, including Europe, the Middle East and Africa, and even Russia and Central Asia," Wang Huabin, vice governor of London branch of Bank of China (BOC) also told Yicai Global.
Brexit will lead to some uncertainties, but he does not think London's position as an international financial center will be replaced, in Wang's eyes. "It is rooted in history, and will continue into the future."
After the Belt and Road Initiative was put forward, BOC framed the global strategy of "establishing Belt and Road financial artery," and the London branch is BOC's largest branch covering the Middle East, Europe and Africa as well as the most professional one.
"Over the past few years, BOC has set up several regional product and service centers in London, where the most typical cases include the European and African bank consortium center, foreign exchange transaction center subordinated to the head office, and commodity financing center, which play a great role in covering the whole region," Wang said, and added that BOC have been exactly working together and interacting with branches in these countries through the centers. It has involved in massive projects related to the Belt and Road, and harvested a lot.
Germany at the Hub
While producing the Belt and Road feature series in 2015, Yicai Global reporters visited cities including Hamburg, Duisburg and Berlin, and found the Belt and Road Initiative widely accepted in these areas because of Germany's advantages in Sino-European trade and relevant ocean shipping and freight transportation.
Over the past two years, cargos from China outpaced all other regions in Hamburg. "2.60 million containers were carried from and to China in 2016, and China has become Hamburg's most important partner," said Jens Meier, chief executive of the Hamburg Port Authority at the forum Hamburg – Gateway to the New Silk Road held on April 7.
Direct train schedules between Hamburg and China and those scheduled for stops in Russia are steadily growing, as Meier noted. Now, 177 railway transportation projects operate between Hamburg and 32 Chinese destinations. Rail-borne cargo service have reached a large scale.
"Many clients and business partners have been highly familiar with the advantages of Hamburg. Yet we can improve the combination of waterways, railroads and air transport by strengthening the railroad construction between the two regions, thus providing guarantees for the logistics chain planning," he said.
"Trade and economic ties between Hamburg and China date back to over 200 years ago. The symbolic significance of the Silk Road provides opportunities to expand the friendship between China and Hamburg. I am convinced that all countries between China and Germany will benefit a lot from the Belt and Road initiative," Stefan Matz, Director of International Business, Hamburg Business Development Corporation told Yicai Global.
The Belt and Road initiative is a win-win proposal, Benno Bunse, CEO of Germany Trade & Invest told Yicai Global. "China can open new markets by building infrastructure in countries along the route, like Kazakhstan, Iran, India and Pakistan, and a more stable political and economic climate will bring more business opportunities for these countries. Germany and China are two major powers that can work together on major infrastructure construction, and at the same time, the two countries can also acquire more natural resources and energy needed for their own development from the initiative," he said.
Central, Eastern Europe Await Chinese Infrastructure
During the visit to Poland and Serbia last summer, Chinese president Xi Jinping witnessed the signing of multiple investment MOUs and cooperative projects between China and the two countries, and further pushing forward the construction of Belt and Road in central and eastern Europe.
Waldemar Pawlak, Poland's former prime minister, said at the 26th Eastern European Economic Forum held in Warsaw, Poland in the end of last year, that he greatly agreed that the 16 countries in central and Eastern Europe form the major region with great investment potential between Germany and Russia.
The Belt and Road Initiative has actively promoted trade between Europe and Asia, especially the landlocked countries in central and eastern Europe. At the same time, Polish government officials have also disclosed some concrete projects in cooperation with China, including those in airport building, environmental protection and energy, he noted.
As the first country in central and Eastern Europe that joined in the AIIB, Poland formally became a founding member on March 11 last year. Poland contributed USD831.8 million to the AIIB, accounting for 0.9 percent of its total capital stock.
By joining the AIIB, Poland wishes to gain more infrastructure investments in China's Belt and Road Initiative and benefit from it, Slawomir Majman, President of Polish Information and Foreign Investment Agency, told Yicai Global.
"It is well known that Asia carries the future of the 21st century, and will attract the most investment and construction. Hence, as Poland is a founding member, its enterprises will strive for infrastructure cooperation projects in Asia more effectively as long as they are operated by the AIIB," Polish Radek Pyffel, deputy director of the AIIB, told the press at the end of last year.