19 October 2015
Hualing Group has been investing in Georgia since 2007. Total investments to Georgia by the Hualing Group exceed 500 million USD. The largest projects include the Basis Bank, the Kutaisi Free Industrial Zone and the Tbilisi Sea Complex.
Why is Chinese Hualing interested in Georgia? What does the Group plan on the Georgian market? - Ipress presents an interview with the Vice President of Hualing Group and the Head of the Basis Bank Supervisory Board, Jang Dzun.
- Mr. Dzun, first of all, why did you company become interested in Georgia and which sectors do you find to be the most attractive for investing in Georgia?
I think tourism is one of the best opportunities in Georgia. Georgian wine - this is a special phenomenon, which also can play the key role in the development of the country. Georgia’s geopolitical location is also significant, as it unites Europe and Asia.
Georgia’s geographical location, its investment climate, proper legislative framework and the skills and level of knowledge of the population - all this together provided conditions for the Hualing Group to operate in Georgia for such a long time.
- You have mentioned Georgian wine. Georgia has recently activated marketing strategies on the Chinese market, which found its reflection on export indicators – the export of the Georgian wine to China is increased by almost 90% in 12 months. How big are the chances for the Georgian wine to establish on the Chinese market?
Georgian wine has one of the ancient histories in the world; it is distinguished by its sustainable quality. The Georgian vineyards and grapes are natural and biologically pure.
Traditional Georgian technology of making wine is exceptional. The Georgian wine entered the Chinese market not long ago. It takes time to establish there, but if we consider that the population of China is 1.3 billion people, we can suggest that quite a large number of Chinese people will become the Georgian wine lovers.
Georgian wine is as good as French and Italian well-known wines and it has good prospects in China.
- Shall we expect the Hualing Group to enter Georgian wine market?
Negotiations between the Hualing Group and several different wine producers are underway, so there is a high possibility that Hualing will confirm its interest towards the Georgian wines.
- Georgia will cooperate with China in the project aiming at tea development. Has the Hualing Group any interest in this direction?
We might not be interested or involved in the process, however, we can make the interested Companies and manufacturers familiar with Georgia and the Georgian tea.
- The Hualing Group is a 90 percent shareholder of the Basis Bank in Georgia. How would you evaluate the existing banking sector in Georgia?
Georgian financial market is quite open. After becoming a member of the Hualing Group, the capitalization of the Basis Bank has twice increased. Strong bank is a guarantee of better service for the population, and it also supports our clients and companies in Georgia.
The devaluation of Georgian Lari against the US dollar can have two-side effects. On the one hand, it is profitable for the exporter companies and their competitiveness increases, and on the other hand, it has negative effects for importer companies.
- The index of dollarization is quite high in Georgia. Does the Bank consider any steps in this direction?
The high rate of dollarization can be evaluated from two sides. For exporting companies it is favorable credits in dollars and for importers – quite contrary. High dollarization will increase the price of dollar, but this will bring a bad outcome to the local currency. I think the main way out is to attract more investments in the country to have stable currency.
As for the Basis Bank, we will try to increase our credit portfolio both in GEL as well as the USD.
- The Hualing Group is one of the largest Chinese investors in Georgia, how big is your portfolio today and do you plan to increase it?
The Hualing Group’s investment in Georgia exceeds 500 million USD. First of all, we are going to work in the sectors we already exist to improve the projects we have started and then on the basis of the strengthened ground, move to the new projects.
The Hualing Hotel said a new word in the Georgian tourism sector. The hotel has captivating and new direction both for business circles and for tourists. This is a French-Chinese mixture. Our portfolios include real estate, the largest trading center in the South Caucasus, which will soon be accomplished and fully occupied by the new brands by the end of next year.
- At what stage the Kutaisi Free Industrial Zone Project is?
Our main direction with this respect will be to attract Chinese export and recycling companies. It will fill the huge gap in Georgia’s production. This is a very important project for employing, collecting taxes and attracting foreign investments not only for the economy of Georgia but also for the development of the Hualing Group itself.
We saw here a not very well developed industry and we want to contribute in different sectors including consumer goods industry and recycling. The Kutaisi Industrial Zone will be the main point, but we also have Tbilisi Sea Plaza, and the Special Economic Zone of Tbilisi Sea, which is not yet fully implemented, but it will be one of the most important areas with its logistics centers.
- Why did the project run late?
The Youth Olympic Festival 2015 was the challenge that we had for so many years. A large enough village must have been accomplished in the tightest terms. All of our money and human resources were directed towards the timely completion of the project. Now we have turned our resources to the Kutaisi Free Industrial Zone.
- Where will the selling market be located?
The preferential regime with the EU became the main driving force. We will attract companies from China and the European Union will be the selling market.
- As it is already known, Georgia is currently negotiating the Free Trade Agreement with the People’s Republic of China. How will it benefit for the two countries? And shall we expect to have increased investment flow from China?
Georgia has a preferential trade regime with Europe, which is very important for its economic development. Negotiations with China are now underway and in case of successful completion, this will be the best way to export Georgian agricultural products to the Chinese market. In particular, Georgian wines. It is a mutually beneficial initiative for both parties, especially for Georgia. This will increase employment as well as macroeconomic indicators of the country.
- How do you evaluate Georgia’s capability of becoming a logistics hub?
There is a potential of developing everything in Georgia. There is not just a single promising segment or sector in Georgia but many. Therefore, all sectors have a very large potential of development here. This is true not only for Chinese companies, but for those from different countries around the world. The whole country and its investment potential is interesting and not just a single sector.
Georgia’s Geographical location is the factor that contributes to its importance in the Silk Road Project. ‘One Belt, One Way’ is outmost beneficiary for countries engaged in it. Holding Silk Road Forum in Georgia is a very good decision by the Georgian Government. One Belt, One Way’ will have more positive impact on Georgia’s economic development, as well as on improving economic and social conditions of the population.
Silk Road Forum will enhance relations between the countries and this will strengthen Georgia’s position on the international level.