Chinese firms expect a limited impact from the Ukraine crisis; some seek to benefit.

025, Feb 2022

SHANGHAI (Reuters) A growing number of Chinese firms with business in Ukraine or Russia say the impact from the region's crisis is limited for now, as some sought to reassure investors with the scale of Chinese investment in the area narrow and dominated by state firms.

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U.S. President Joe Biden hit Moscow with a wave of sanctions on Thursday after Russia invaded Ukraine, which impedes Russia's ability to do business in major currencies.

Guizhou Chanhen Chemical Corp, for example, told an investor relations platform on Thursday that its business in Ukraine and Russia is small, so there's almost no impact.

Jiangsu Provincial Agricultural Reclamation and Development Co, which announced earlier it would invest 33 million yuan ($5.22 million) in setting up a subsidiary in Ukraine, told the China Securities Journal that the plan has been on hold due to political instability.

Early this month, China and Russia declared a "no limits" partnership, vowing to collaborate more against the West. But despite closer ties driven by geopolitics, economic and financial integration between the two neighbors is limited.

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"My impression is that the Chinese investor community looks at Russia as a pretty risky and hard destination to invest ... a lot of corruption risks, a lot of regulation, volatility, and sanction risk," said Alexander Gabuev, senior fellow and chair of Russia in the Asia-Pacific Program at the Carnegie Moscow Center.

He added that most Chinese investments in Russia are state-owned firms and centered around energy.

Sichuan Wisdom Technology Co, a Chinese maker of water meters, told investors that it has limited export business with Russia through a subsidiary. At the same time, Medical System Biotechnology Co said its Ukraine business accounted for a small portion of its revenue.

Some companies even hint they could benefit from the geopolitical tensions.

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Beijing Highlander Digital Technology Co, which makes marine electronic technology systems, said its product can monitor maritime activities at times of war "so as to avoid the situation during the Russia-Ukraine conflict, where the seaport city of Odessa was quickly overwhelmed."

Shenzhen Forms Syntron Information Co, in response to an investor's question about the impact of financial sanctions against Russia, said that it was exploring the use of China's digital yuan in cross-border transactions.

($1 = 6.3177 Chinese yuan renminbi)

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