MUFG cashes in on China windfall

MUFG China is hitting a "sweet spot" as Chinese companies accelerate to expand their footprint in the Asian market amid escalated geopolitical uncertainties, making China-related business increasingly important to the Japanese banking group's layout in the region, executives said.

Also providing opportunities for the bank, they said, is the recovering confidence of multinational corporations and global institutional investors in the Chinese market, which is underpinned by China's progress in economic restructuring and attractive asset valuations.

Benjamin Lam, deputy president of MUFG Bank (China), a subsidiary of Japanese global financial services group Mitsubishi UFJ Financial Group, said that it should be "an inevitable fact" that China-related business will become even more significant in MUFG's Asia strategy as Chinese companies venture into new markets in the region.

"For the last few years, Chinese corporates — as they try to manage the impact from geopolitical uncertainties — have been expanding a lot more of their activities in Asia, not just in terms of exporting the products, but also starting to diversify the production bases in other Asian economies.

"We've been helping more and more of our clients operating their business in this region in the last 12 months," Lam said in an exclusive interview with China Daily, giving examples of assisting a major Chinese home appliance manufacturer in securing financing for operations in Thailand.

Leveraging MUFG's deep Asian network, especially in Vietnam, the Philippines, Indonesia and Thailand, Lam said the bank expects similar activities to be increasingly frequent in the years to come, injecting a strong impetus to the bank's business growth.

Lam's remarks came in as the US administration imposed tariffs of over 100 percent on Chinese imports. The tariff war may further prompt Chinese companies to seek globalized development in developing economies and Europe, experts said.

"Taking Southeast Asia as an example, Chinese enterprises can achieve shared development with local peers through technology transfer and infrastructure construction, so as to create long-term and stable market demand," said Guo Bin, a professor at the School of Management at Zhejiang University.

MUFG specifically identified opportunities in the sectors of the electric vehicle ecosystem, mobile phone manufacturing and ESG — or environmental, social and governance themes — and organized its Chinese business accordingly last year, Lam added.

"That's exactly the sweet spot that we are hitting. A lot of companies in these sectors are expanding their activities in the Asian market, such as Indonesia and Thailand."

Another opportunity that MUFG is keen on is foreign investors' improving interest in the Chinese market, Lam said, adding that the bank is ready to support multinationals' business expansion in China and facilitate global investments in local bond and private equity markets.

"After strategically reviewing their business in China, a lot more multinationals are now reconfirming their commitment to developing and continuing business here."

"The Chinese economy is improving, growing at a much better pace," Lam said, amid strides that the country is making in economic restructuring and the government's consistent efforts to revive consumer spending. These steps have reinforced investors' confidence as growth in some other economies seems to be weakening.

Kennis Wong, head of greater China debt capital markets at MUFG Securities Asia, said that foreign investors' participation in mergers and acquisitions of Chinese companies has been growing recently as they deem Chinese companies more valuable across sectors.

"M&A activities are broader than just artificial intelligence," she said, as AI may be a starting point for igniting international interest but foreign participation in M&A activities also extends to other sectors such as the consumer sector.