Businessman Huang Nubo says an invisible barrier still exists for Chinese investors seeking opportunities abroad, after finding out his application for a land deal in Iceland was rejected on Saturday.
“The denial reflects the unjust and parochial investment environment facing private Chinese enterprises abroad,” Huang said at his Beijing company headquarters Saturday morning in an exclusive interview with China Daily.
He said the rejection was a loss for both Iceland and Chinese investors.
Huang’s $200 million investment plan was to buy 300 square kilometers of land in northeast Iceland for a resort project.
The sale had been initiated by the Icelandic landowners themselves, Huang said.
He received news of the rejection by the Icelandic Internal Affairs Ministry at 4 am on Saturday, and said he had received no prior requests to communicate with them before the announcement.
Although his Zhongkun Investment Group had nothing to lose even if the proposal was rejected, Huang felt it was significant in that it highlighted the prejudice faced by Chinese investors abroad.
Sixty percent of the people in Iceland had voted for the purchase in a recent poll by a local publication and Huang himself had seemed confident in getting approval.
The reasons for the rejection, according to a statement by Iceland’s Internal Affairs Ministry, was that “Icelandic law imposes strict conditions on corporations wishing to acquire ownership or the right to utilize Icelandic properties and it’s clear that the company in question doesn’t fulfill any of the requirements”, according to a Bloomberg report.
Huang said the ministry had been less than helpful about the information needed to help expedite the application, and he even speculated that the rejection may have been the result of a power struggle among politicians within the country.
Icelandic media reported that Sigmundur Ernir Runarsson, a member of the national parliament, said the rejection was a horrible message to investors at a time when foreign capital is much needed to help Iceland’s economy.
Iceland is only now slowly recovering from financial ruin in 2008 when its banks collapsed.
Runarsson said at least 25 foreign investors had succeeded in acquiring land in the past, bypassing the regulations the Ministry had quoted.
“There are still double standards,” Huang said. Countries in the West are eager to “encourage the opening of the Chinese market while they close their doors to Chinese investments.”
Huang warned fellow entrepreneurs from China of the risks in Europe. Before going into the global market, he said, they should make sure they fully understand the political environment or risk being caught between conflicting political powers.
“The so-called political stability for foreign investments is not like what we think we know, and what they preach,” he said.
His plan to invest heavily in Iceland had stirred controversy and debate worldwide. Huang, in a previous interview with China Daily, had argued that his decision was motivated by his love for the country’s natural beauty and his lengthy connection with its people.
His roommate at college in Peking University was from Iceland, and he had sponsored an exchange of poets from China and Iceland last year.
Icelandic Internal Affairs Minister Ogmundur Jonasson said he is not overly worried the incident will have any effect on direct foreign investment because “investors will have more confidence in a nation which abides by its own laws”, according to Bloomberg.
But the minister is facing questions at home, including some from Prime Minister Johanna Sigurdardottir, according to Smuguna.
Johannes Hauksson, one of the landowners who had approached Huang, said the decision was mean and that he now faces great financial loss.
For Huang, the deal is closed and he says he will no longer pursue the matter.
The incident had taught him a lesson, he said: The best investment opportunities are right here at home, where he is familiar with the conditions, and the market is mature and the potential is bright and clear.
Huang said he would divert his investments to projects in the United States, and other Nordic countries such as Sweden and Finland.
Bao Yujun, chairman of the Research Association on Private Economy, told China Daily he thinks the rejection shows a continuity of the Cold War mentality that “investment from private Chinese entrepreneurs is a threat to national safety”. He said Chinese companies should be cautious and aware of that in their plans to go global.