It is asually for us to talk more about Chinese investments in Russia, undoubtedly there are objective reasons for this. The total volume of Chinese investments in Russia for 2020 was $ 12.8 billion versus $ 1.067 billion of Russian investments in China. According to our estimates, the volume of accumulated Chinese investments in Russia exceeds $ 50 billion. In this case, what is the real volume of Russian investments in China? In this article, we will provide an overview of the most significant Russian investment projects in China.
Top 6: PJSC RUSAL, a cathode plant in Linshi county, $ 10 million
In 2006, Rusal bought a cathode plant in Linshi County, Shanxi Province. The cathode production volume at the plant was 15,000 tons per year, which covered half of the aluminum giant's annual demand. Rusal was attracted by the convenient logistics: the Chinese cathode production is close to the company's Siberian aluminum smelters, so vertical integration made sense. The deal amounted to $ 6-7 million, the cost of modernization amounted to another $ 3 million. This deal was the first large Russian corporate investment in China.
Top 5: PJSC RUSAL, Baoguang Cathode Plant, $ 20 million
In 2008, Rusal continued its expansion in China and bought a second cathode plant, Baoguang, also located in Shanxi province. The plant's capacity at the time of purchase amounted to 9.3 thousand cathode blocks in annual terms, while Rusal expressed interest in expanding production to 20.9 thousand tons. Rusal's estimated investment in the purchase and modernization of a manufacturing facility is $ 20 million.
Top 4: Sportmaster, $ 40 million
Russian clothing brands traditionally used contract manufacturing in China, but Sportmaster was the first to begin expansion and open a chain of stores under its own brand. The sports giant started its investment project in 2012 and has since opened more than 10 Sportmaster stores in Northeast China and 20 Ostin stores. The total investment in store openings, logistics centers and marketing promotion is estimated at $ 40 million, which is a record for the Russian retail sector.
Top 3: Kari, Sichuan footwear factory, $ 200 million
The Russian shoe company Kari is completing the construction of the first plant in the PRC, after which it is planned to build a second plant, as well as a block of administrative buildings and dormitories for the company's employees. Construction is underway in the Anyue Economic Development Zone in Sichuan Province. The area of the object is about 120 hectares. The total investment in the construction should amount to $ 200 million. At the first stage, 10 lines for shoes production will be launched, the production capacity of which should be 6 million pairs per year. The company will create over 2000 jobs.
Top 2: USM Holging Technology Portfolio Investment, $ 300 million
USM Holding, after exiting Western portfolio investments in Facebook and Uber, has invested in a number of Chinese technology companies. The portfolio includes stakes in Alibaba, Didi, Xiaomi and JD. The businessman himself did not disclose the size of his investments, but according to the RAUIE estimates, they exceeded $ 300 million. In 2017, USM withdrew from most of its investment projects in China, fixing a profit. In particular, for Abibaba, Usmanov reported a 500% profit.
Top 1: Vi-holding, $ 3.4 billion
The largest Russian investment project was implemented in Henan province with the participation of the Russian aluminum producer Vi-holding. The company established a subsidiary Henan Yulian Energy Group Co., Ltd. The Chinese project began to be implemented in 2006 and, at the moment, the company produces 750 thousand tons of electrolytic aluminum per year, over 1 million tons of aluminum, about 150 thousand tons of anode products, and also has its own capacity of over 2.8 GW. The company focuses on the latest developments in the production and processing of aluminum, and, together with Chinese specialists, is engaged in R&D. It is noteworthy that in 2019 the company expanded its investments geography to Sichuan province and agreed to build a 500 thousand tons per year aluminum production plant there in Guangyuan county.
Bonus: Tianjin Refinery, $ 5 billion
The oil refinery in Tianjin is a "long-term construction" of the Russian-Chinese investment cooperation. Negotiations on it between Rosneft and CNPC have been going on since 2014, and, at the moment, the parties have agreed on the feasibility study and the configuration of the plant. Its annual refining volume will be 16 million tons of crude oil, of which 9.1 million tons will come from Russian supplies by Rosneft, and the refining depth will reach 95%. The total investment in the construction of an oil refinery and a network of 500 filling stations in northern China is estimated at $ 5 billion. The project is being implemented by a joint venture in which Rosneft has 49% and CNPC has 51%.
Russian investments in China significantly exceed the official figure of $ 1.067 billion and, according to our estimates, are at the level of $ 4-5 billion. The discrepancy is due to a number of factors - some Russian companies under sanctions prefer not to advertise their international projects. Another reason is the peculiarities of Russian investments abroad through offshore jurisdictions, which do not allow them to be taken into account in official statistics on the balance sheet of Russia.
