AMCHAM-中国的“一带一路”：对美国企业的影响（英文）-2018.6-8页

Summary of "GPS Manufacturing Quarterly: China's Belt and Road - Implications for US Firms"

Core Content

The Belt and Road Initiative (BRI), launched by President Xi Jinping in 2013, is a comprehensive strategy encompassing economic, financial, and political objectives. It has become a major driver of global infrastructure development, with over USD 1 trillion committed to more than 1,700 projects across 61 countries. While the BRI is broad in scope, it primarily focuses on transportation, power generation, and industrial infrastructure.

This report explores the opportunities for US firms in the BRI context, emphasizing the existing relationships many US companies have with key Chinese entities involved in BRI projects. It also outlines the value chain and procurement processes that US firms may need to navigate to participate effectively in BRI projects.

Main Opportunities for US Firms

• Existing Relationships: Many large US firms in China, such as Honeywell, Cummins, GE, Rockwell, Caterpillar, and Dell, already have established relationships with Chinese BRI players and are well-positioned to benefit from the initiative.

• Access to BRI Markets: US firms can leverage BRI networking platforms and business associations like AmCham, as well as US Embassy working groups, to connect with potential partners and customers.

• Diverse Product Applications: US firms can offer products and components for both direct use (e.g., turbines, construction equipment) and indirect use (e.g., power components, IT parts) in BRI projects.

• Partnership with Chinese Firms: US SMEs may find it beneficial to partner with larger US firms that are already engaged in the BRI ecosystem to overcome challenges in accessing and competing in these markets.

Key Challenges and Considerations

• Import vs. Localization: The Made in China 2025 policy favors local production, making it harder for imported goods to compete. Some US firms have already shifted manufacturing to China to remain competitive.

• Regulatory Uncertainty: China's frequent and ad-hoc policy changes can significantly affect the revenue and growth prospects of foreign companies. Understanding these trends is essential for developing a sound BRI strategy.

• Risk Management: Large BRI projects often involve long gestation periods (10–30 years) and are vulnerable to political interference. As of the end of 2017, only 19% of BRI projects were completed, with 7% delayed, suspended, or cancelled. US firms must carefully assess entry costs, licensing, performance requirements, technology transfer, and compliance with US law.

• Procurement Dynamics: Most BRI projects are procured by Chinese SOEs, and procurement entry points vary depending on the product and the project's complexity. Pre-qualification is often required, but the process is not always transparent.

Strategic Recommendations

• Understand the Value Chain: Familiarize yourself with the typical BRI project value chain, which involves tier 1 EPCs, tier 2 and tier 3 subcontractors, and OEMs.

• Engage with Local and Global Platforms: Participate in BRI-related events, forums, and associations to build visibility and partnerships.

• Adapt to Local Policies: Be aware of and adapt to regulatory changes in China and host countries, especially regarding tax incentives and local content requirements.

• Build Strategic Partnerships: Consider forming strategic alliances with US firms already active in the BRI to enhance market access and competitiveness.

Conclusion

The BRI presents significant infrastructure development opportunities for US firms, particularly in sectors like power, transportation, and industrial equipment. However, the initiative is complex and evolving, with regulatory and political risks that must be carefully managed. US companies with existing ties to the Chinese market or those forming strategic partnerships are better positioned to capitalize on these opportunities.

Key Figures and Data

• Total BRI Funding: Over USD 1 trillion committed to 1,700+ projects in 61 countries.
• Project Completion Rate: Only 19% of BRI projects were completed as of end 2017.
• Project Status: 7% of projects were delayed, suspended, or cancelled.
• GE China Example: Orders from Chinese EPCs increased by more than 500% from USD 400 million in 2010 to USD 2.5 billion in 2017.

About the Report

This report is part of a series of quarterly analyses published by GCiS, a research firm specializing in China-focused strategic insights. It is available exclusively to GPS Program members, who can access further details by contacting gps@amcham-shanghai.org.