Georgia: China’s export launchpad to the EU

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If China’s New Silk Road is to lead into Europe, then it seems Georgia may become the doorstep. Over half a billion dollars has been invested in the Caucus country by China to develop trade and manufacturing operations, including nascent industries that can leverage Georgia’s associate member status with the European Union to gain export tax benefits. Georgia’s Ambassador to the People’s Republic of China David Aptsiauri explains more.

What project best typifies China’s engagement in Georgia today?
There are over 30 Chinese companies in Georgia, but only one name sticks out — Hualing Holding Group, which has become the largest single investor in the country today. In October 2015, Hualing Holding committed an initial $30 million to renovating a Free Industrial Zone in Kutaisi, our second largest city, which is located in the western part of the country. Georgia’s manufacturing sector is undeveloped, so Chinese involvement in building local industry cannot be understated. One of the first major projects in the FIZ will be an elevator factory, which will provide job opportunities and training to the local population.

How else is Hualing Holding Group involved in Georgia?
The Chinese conglomerate has invested about $500 million into the Georgian economy, including, in addition to the FIZ, the development of the Caucasus’ largest wholesale center, a group of luxury hotels, a wood-processing and furniture business, and the majority stake acquisition of Georgia’s third largest bank, Bank Republic. Hualing also owns JGS Basis Bank. More projects are currently being negotiated with Mr Mi Enhua, Hualing’s founder.

Why would China open trade and industrial operations in Georgia?
In July 2014, Georgia joined the European Union as an associate member, providing us with more favourable trade regimes when engaging with EU countries. Georgia is the only country in the Caucasus region to have gained this membership, further cementing our geostrategic value. Now, when we create joint ventures with foreign partners, including China, the jointly produced goods made in Georgia will be able to be sold to Europe with low or no tariffs, depending on the country.

What industries could also fit into this export scheme?
As part of the New Silk Road, Georgian-made agricultural and textiles products have a high potential to benefit from both China’s investment initiatives and our relaxed tariffs with the EU. Now that manufacturing is developing, we can also expect more new industry to be created. The fact that we have good levels of internal stability will help give our trade operations more value.

What is a competitive product being developed by Georgians?
Georgia has a wine producing industry with a pedigree as cherished as tea making in China. Wine has been made in Georgia for 8,000 years, making us one of the oldest wine regions in the world, and our wine producers have 535 grapes in use. While we are not large producers like France or Spain, Georgian wine sales grew 122 per cent last year compared to 2014. Recently, Georgian wine has begun to become popular in China, the world’s fastest growing wine market, and wine traders in the Chinese hinterlands, not just the large commercial cities, now carry Georgian wine.