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The China One Belt One Road Initiative: Business Opportunities For The Global ITS Industry

China’s new One Belt One Road (OBOR) Initiative is an ambitious modern-day adaptation of the historical Silk Road, which could have wide reaching implications for the global economy. OBOR passes through over 60 countries along the way, across Asia, Europe, the Middle East and Africa.

These six economic corridors are the framework of the OBOR initiative, which cover nearly two-thirds of the world’s population and one-third of the total global GDP. The China Development Bank has reportedly reserved more than US $890 billion for the development of One Belt One Road. The route for this initiative will collectively need $5 trillion of investments in transport infrastructure. With thousands of billions of dollars in investments, China’s One Belt One Road initiative represents a tremendous opportunity for global ITS companies who can support the development of new transport infrastructure with China and its partner nations.

One Belt One Road was introduced by Chinese President Xi Jinping in 2013 to promote investment and economic trade along two routes, The first route is via the New Silk Road Economic Belt, which will run by land from China to Europe. The second route is a Maritime Silk Road, which will push up through Europe via the Suez Canal. Highlights along the route will include Kuala Lumpur, Nairobi, Istanbul, Moscow and Venice. Key points in China will include Fuzhou, Xi’An, and Urumqi.

Three financial institutions have been set up to provide backing for One Belt One Road investments. These institutions are alternatives to the World Bank, the International Monetary Fund and the Asian Development Bank. The Silk Road Infrastructure Fund was launched in 2014 and is financed by China’s forex reserves with a capital of $40 billion. The Asian Infra Investment Bank plans to compete as a global investment bank and boasts 21 Asian member countries with a capital of $100 billion. The New Development Bank was created by Brazil, Russia, China, India and South Africa and has a capital of $50 billion with plans for $100 billion. The development of transport infrastructure such as railways, roads, ports and airports is at the top of their agenda and will be a particular focus in this initiative. There will be a tremendous amount of opportunities both in the short, medium and long term for global ITS companies.

Many of the more immediate opportunities will be within China itself as the country gears up to deliver on the OBOR initiative. Thirty-one Chinese provinces have indicated that they will actively participate in the implementation of the One Belt One Road strategy. Two-thirds of these provinces have included it as a development priority and have featured it in their annual work plans for 2015, which includes a wide range of projects.

To support the initiative, vast infrastructure, transportation, highway, city development and reforming projects will need to be built in the coming decades. In order to profit from OBOR, global ITS companies will need to start strategizing now on how to be a part of this initiative.

To win the business opportunities, it is critical for the global ITS companies to get involved in this initiative as soon as possible. Xinjiang and Fujian are the two most important locations of the OBOR initiative, while Gansu, Ningxia, Qinghai, Shaanxi, Xinjiang, Chongqing, Sichuan, Yunnan, Guangdong, Hainan, Jiangsu and Zhejiang will also come into play as OBOR develops.

The objective of One Belt One Road also supports the development and reformation all of the undeveloped provinces and regions in China. The development of the OBOR opens up new business opportunities for global ITS companies to be a part of this exciting development within China. As an overseas company participating in One Belt One Road, an effective business model will be critical for ensuring success in the partnership.

The original Silk Road, which was established during the Han Dynasty linked China with the Roman Empire via a series of trade routes. However, the Silk Road ceased being a route for silk around 1453 as the Ottoman Empire gained power. A rebirth of a new Silk Road will most definitely usher in a new era of prosperity for China and increased trade with strategic partners. After being defunct for over 500 years, the Silk Road will live again.

Source:The China One Belt One Road Initiative : Business opportunities For the Global ITS Industry

Author : Ray LamPresident at Esme One Asia Ltd.