The scope for further economic cooperation is enormous, says newly appointed President of the Cyprus China Business Association Panicos Kaouris.
How important is China for Cyprus?
China is tremendously important for Cyprus, as it is one of the strongest economic powers of today. We have only just begun scratching the surface of the great potential China could offer Cyprus. It is an important beacon of light for us, as Cyprus is presently going through tough economic reforms. China is currently showing some serious interest in inward investment in Cyprus, not just using it as an intermediary holding company location, but investing in our real estate sector which is in great needof investment. We hope that Chinese interest will also extend to our oil and gas and tourism industries.
China is the biggest exporter of capital globally and it is extremely important for us to work hard to convince the Chinese to use Cyprus as a stepping stone for further investments into other jurisdictions, especially within the European Union and Eastern Europe. Until now China has focused more investment into minerals and other raw materials targeting areas such as Australia, Africa and Latin America. As China gradually changes its focus towards knowledge and high value-added products, Europe is increasingly becoming more attractive for Chinese investments. And as our region becomes more interesting to the Chinese, so should Cyprus in its role as the regional hub of choice for such investments.
What key advantages does Cyprus offer to Chinese investors and which sectors provide the most opportunities?
The geographical location of Cyprus is ideal to set up shop for investments in several parts of the world – namely Eastern Europe, Southeast Europe, the Middle East and North Africa. The importance of creating substance plays a significant role and fully-fledged offices are a must nowadays, making location a crucial part of business operations. Cyprus is better placed than many other jurisdictions in that we cover a diverse geographical spectrum for business, we have a highly skilled workforce, a cost effective business operating environment and one of the most competitive tax frameworks available. For example, in most cases a Cyprus holding company essentially pays no tax as both dividends and gains arising from the disposal of its investments are tax exempted and any payments it makes abroad are free from withholding tax. Also financing and royalty structures have minimal taxation in Cyprus.
Chinese business can also enjoy the benefits of the extensive network of Double Tax Treaties (DTT) Cyprus has with 50 countries in Europe and beyond. We are also working towards updating our DTT with China and to enter into a treaty with Hong Kong, which is another interesting market for Cyprus.
The real estate sector in conjunction with permanent residence opportunities linked to the purchase of a property in Cyprus was the first to attract the Chinese. The interest in Cyprus properties has helped our struggling real estate sector especially in the tourist resort areas. This Chinese interest is currently entering a more rewarding phase whereby Chinese real estate developers and fund investors are seeking opportunities to either enter into joint ventures with Cypriot enterprises or go at it alone into large scale real estate development projects.
Looking forward, shipping, oil and gas and tourism are key sectors, which should be of interest for the Chinese provided we market the opportunities effectively. In addition to the rapidly developing oil and gas sector, the renewable energy sector has great potential for more Chinese investment in the future. China is a leader in renewable energy technology and this know-how could be of great value as Cyprus works hard to meet its target to supply 13% of the island’s energy through renewable energy sources by2020.
The education sector in Cyprus is very interesting for the Chinese and we have already seen an increase of Chinese students in our universities as well as in private high schools. In the long run, there could also be possibilities for Chinese educational institutions setting up in Cyprus, as many other foreign universities have established campuses here.
What are the most common questions or impressions about Cyprus that you have faced in China? What advice would you give the Chinese when dealing with Cypriots and to Cypriots dealing with Chinese?
Cyprus is still relatively unknown in China, although the recent financial assistance package Cyprus received from the Troika (the European Commission, European Central Bank and theInternational Monetary Fund) has put Cyprus in the forefront of global news. Those who have visited Cyprus have very positive impressions. They especially enjoy the fresh produce of Cyprus, the clean beaches and warm and friendly atmosphere of the island.
I would encourage the Chinese people to make the investment in time and money and come and experience what Cyprus has to offer first hand. My advice to our Chinese counterparts is not to be daunted by our sometimes louder and expressive manner and to feel confident to always speak their mind and not to hesitate to set their terms clearly. Be assertive, speak freely and communicate exactly what you want – this will be well received in Cyprus.
My advice to fellow Cypriots is to take the time to understand Chinese culture and the way they do business there. The Chinese adopt a much slower and more thorough pace during which a minimum level of trust needs to be developed before any real business is conducted.
In these tough economic times, how would you reassure Chinese investors that Cyprus remains a reliable business hub?
Although Cyprus was forced to seek a financial assistance package to recapitalise its banking sector and is now implementing tough austerity measures, it is important to highlight the positive progress Cyprus has made in the last seven months. We have been praised by the Troika for meeting all our set targets detailed in the memorandum to date and are working hard to strengthen our economy. A significant factor to note is that all the fundamentals that established Cyprus as an attractive business centre have been protected. Our advantageous tax framework has remained intact and our banking sector will survive – albeit on a smaller and more efficient scale. Our government has also introduced various initiatives to fast-track and support investment into Cyprus, providing great opportunities to attract more foreign business.
Apart from the attraction of relaxed Mediterranean life by the sea, we offer significant tax benefits and all the added advantages that make Cyprus an ideal location to add substance to international business operations.
What is the role of the Cyprus China Business Association and how do you support business between the two countries?
The Cyprus China Business Association (CYCHIBA) is the Chinese arm of the Cyprus Chamber of Commerce and Industry. Our role is to promote and support business with both Cypriot and Chinese entrepreneurs and professionals. We have been in operation for ten years, but have seen more activity in the last few years with increasing Chinese interest in Cyprus. Our aim is to bring together entrepreneurs from both sides and to help match their business interests. We offer advice and support on procedures, setting up shop in Cyprus, help with various other sectors as well as give information about living and education possibilities in Cyprus.
How do you see the relations between Cyprus and China developing in the next five years?
There is enormous potential and the sky is the limit, provided we build solid cultural and business foundations to foster our good relations and also deliver what we promise when doing business with each other. Although we have a long-standing diplomatic relations, there is still much we can and must learn about each other’s culture and history. China is an exciting and significant economy and Cyprus must understand the needs of this new market and find ways to satisfy these needs accordingly.
What message would you like to convey to the Chinese business community?
Cyprus offers many opportunities in various sectors of business, tourism and real estate and we welcome China with open arms. We have significant advantages and provide a great base to support Chinese outbound investments into Europe and into Cyprus itself.