By Zhang Jin

"Worried?"

"No, not at all," shrugs Agostino Conte.

That was the prompt response from the 56-year-old representative of Italy's largest steel maker and trader Duferco, when asked whether he was concerned that China's reining in of an overheating steel sector would affect his business in China.

On the contrary, "our business in China will definitely rise this year and next year," he said confidently.

Duferco exported a total of 2.5 million tons of steel to China in 2003. The figure is expected to rise to 3 million tons this year.

"When an economy like China starts to take off, its appetite for steel will be enormous," he said.

Duferco has been exploring the Chinese market for more than 10 years and says it will expand its presence.

"We are here seeking long-term development instead of temporary profit," said Conte.

Conte visited China recently as a member of a business delegation headed by the Italian minister of productive activities investigating further business opportunities in the world's fastest-growing market.

They came at a time when the country is making efforts to cool down overinvestment in certain sectors, steel included.

In past months, the Chinese Government tightened bank loans and imposed serious checks to curb exceptionally high investment in overheating sectors such as steel, cement and aluminum.

Assumptions have emerged that the campaign, which aims to rein in sizzling economic growth to help it avoid major fluctuations, will probably inhibit foreigners' incentive to invest in China.

However, that is not the case.

Recent macroeconomic control will not put much of a dent in foreign-invested companies, which are really interested in the Chinese market, said Qu Hongbin, HSBC's leading economist in China.

An inhibiting influence will probably only be apparent to speculative investors who adopt a "hit-and-run" strategy, he said.

Big international multinational corporations, including those playing in "yellow-carded" sectors, backed Qu's idea, as they design to boost confidence and interest in a nation with a wealth of opportunities.

"We are not worried," said Roger Agnelli, president of Cia Vale do Rio Doce (CVRD) of Brazil, the world's largest iron ore supplier, referring to a possible slowdown of China's investment growth this year, which in some estimates, will drag down the growth of the country's steel imports by 10 percentage points in the remainder of the year.

CVRD has already signed contracts to deliver 35 million tons of iron ore and other minerals valued at US$1 billion to China this year, while last year it shipped 29 million tons valued at US$580 million.

Agnelli's calm response was largely based on his prediction that the country's economic growth will be no less than 7 percent.

Even at such a growth rate, the country's need for steel, iron ore and other raw materials will remain high.

What's more, Agnelli wants a larger presence in the Chinese market.

"We have an interest in talking with big Chinese steel companies or any other big players about the possibility of co-operation," he said.

Having secured prospects in China, these heavyweights have also said they appreciate China's strategy of taming overheated industries.

"It is wise (for the Chinese Government) to implement restrictive measures," said Bernd Leissner, president of Volkswagen Group China.

"This will help dodge dramatic ups and downs in its economy," he said.

Agnelli and Conte shared Leissner's view.

"China's cooling-down measures are good for both the country and multinationals that have investments here," Agnelli said.

Conte says he believes it is an internal affair for China to direct its own further economic development.

China's attraction as an investment destination has not abated amid current economic adjustments.

"For multinational companies, China's market has started to come of age," says Paul Cavey, chief China economist at the Economist Intelligence Unit (EIU) in Hong Kong. "This process is transforming both opportunities and strategic options available to foreign businesses."

According to a newly released EIU report, more than 50 percent of respondents to a survey say China is "crucial to global strategy", with another 41 percent reporting that it was "strategically important."

Long-term and steady profit is the objective they are chasing.

A number of world's giants have added investments in China as confidence has largely replaced early worries after initial success in China and the country's continuous improvement of its investment environment.

For example, Volkswagen Group China plans to invest 6 billion euro (US$7.3 billion) in China in the next five years to double its annual production capacity to 1.6 million cars.

In real estate, a sector also thought to have structural problems, financial authorities' stricter loan policies have greatly curtailed the purchasing power of domestic buyers.

But international investors are continuing to seek bigger presence, anticipating rosy prospects in the longer term.

Singapore-based CapitaLand Limited, the largest listed property company in Southeast Asia, recently established a residential fund in China focusing on investing in mid and high-end residential projects in Beijing and Shanghai.

The company had first planned to issue a US$100 million fund in China, but now it is considering doubling the amount to US$200 million, according to Lin Mingyan, chief executive officer with CapitaLand China Holding Group.

Several other world-renowned financial institutions, including Morgan Stanley, the world's largest investment bank; Lehman Brothers, Rockefeller, Australian Macquarie and Singapore-based GIC, have also established funds to cash in on China's real estate sector.

Aside from large foreign companies, many small and medium-sized enterprises (SMEs) are also eyeing the lucrative Chinese market.

Industry associations and governments of the Netherlands, France and Italy have vowed to help SMEs from their countries enter China.

(China Daily June 11, 2004)