China eyes Norwegian industry again

The wind of business favor is once again blowing Norway’s way from the East

Michael Sandelson
The Foreigner

These indications come following Norway-China trade relations freezing over after Chinese dissident Liu Xiaobo was awarded the Nobel Peace Prize in 2010.

Among other events that occurred were then Foreign Minister Jonas Gahr Støre saying that he “regretted” Chinese reactions, bilateral Free Trade Agreement negotiations stalling, and Norwegian exports of salmon falling.

Tormod Ludvik Nilsen, head of law firm Wikborg Rein’s Shanghai Office, told Aftenposten, however, that “many here are interested in the good opportunities for investments in Norway now. Chinese players will be realizing this potential.”

2009-14 strategic Chinese investments in Norway were about USD 5.5 billion. Most of this sum was made up of China National BlueStar (Group) Co Ltd’s purchase of silicon and special alloys manufacturer Elkem Solar, and China Investment Corporation’s GDF Suez purchase.

Some Norwegian businesses did not experience negative effects from the Nobel row. Moreover, state-owned the Industrial and Commercial Bank of China (ICBC) was looking at establishing branches in Norway, and the Chinese were considering investing in inter-Scandinavia rail travel.

Nilsen, whose firm offers consulting services to Chinese companies wishing to take over companies on the Oslo Stock Exchange, believes oil and gas, renewables, shipping, and offshore and shipping equipment supplies are four areas of particular investment interest.

“The Chinese look upon Norway as being a pioneering county in an international context regarding developing these industries,” he said.

“We’ve seen increased interest, particularly in the last six to nine months. Norwegian companies in certain segments are now also particularly attractive due to the oil downturn and weakened Norwegian krone.”

According to DNB Markets senior economist Ole André Kjennerud, the Chinese also wish to “spread their investments and risk,” and are considering buy-ups with a view to giving them new and better competence and technology in important industry sectors.

The International Energy Agency (IEA) remarked in their 2014 report that “China’s National Oil Companies (NOCs) have entered a new phase of mergers and acquisitions (M&A) activity and emerged as global players, expanding and diversifying their reserves after more than 20 years of venturing overseas.”

In 2009, the China National Offshore Oil Corporation (CNOOC) purchased partial share of Statoil’s U.S. assets in deep-water areas of the Gulf of Mexico. Chinese conglomerate the Sinochem Group acquired a 40 percent stake in Statoil’s Peregrino field for USD 3.07 billion the following year.

July 2011 saw the publication of a joint Confederation of Norwegian Enterprise (NHO)-Norwegian Shipowners’ Association report promoting Norwegian-Chinese trade relations.

“We have been working in China since 1986, and more intensively after 1995, doing projects in cooperation with two main Chinese counterparts the Chinese Enterprise Confederation (CEC) and All China Confederation of Industry and Commerce (ACFIC),” stated then NHO Director Espen Søilen. “China’s rapid growth has made it a global business powerhouse looking to establish more corporate relationships internationally.”

When asked how Chinese investment affect would influence control of Norwegian companies, Marc Lanteigne, senior research fellow at the Norwegian Institute of International Affairs (NUPI) in Oslo told The Foreigner: “There has been concern in parts of the world about Chinese and other foreign investments in developing countries. Norway has a great deal of experience with outside investments, however, so I don’t see the same level of difficulty arising.”

“Moreover, the bilateral Norway-China Free Trade Agreement talks were almost completed before the diplomatic impasse in 2010, and both countries had had a lot of opportunity to get on each other’s economic wavelength. It’s very likely that comprehensive protocols would have been put into place if the deal had been done, and knowledge gained at these talks will probably come in useful should negotiations start up again,” he added.

This article was originally published on The Foreigner. To subscribe to The Foreigner, visit theforeigner.no.

It also appeared in the May 29, 2015, issue of the Norwegian American Weekly. To subscribe, visit SUBSCRIBE or call us at (206) 784-4617.

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