China's reforms = business opportunities

Singaporean Jeremy Yee is excited at the prospects for his company following an easing of China's one-child policy. He believes the change could inject new life into his cord blood business.

On Nov 15, the Chinese Communist Party (CCP) said couples will soon be allowed to have two children, as long as either spouse is an only child. Currently, a couple can have a second child only if both of them do not have siblings.

Experts believe the relaxed policy could add as many as two million babies to China's current newborn population of 16 million a year. The increase, in turn, will boost demand in sectors from retail to education and health care.

Mr Yee, Cordlife Group's chief executive, believes the change is a boon for his company, which runs Singapore's first private cord blood bank and has a stake in China's top operator, China Cord Blood Corporation (CCBC).

"Parents who missed the opportunity to store their firstborn's cord blood will be able to do so for their second child," he told The Straits Times. Stem cells in the blood of an umbilical cord can be stored and used for treatment to replace damaged cells.

Cordlife is exploring and developing new services in cord blood and cord tissue banking with CCBC, he added.

Mr Yee is not alone in spotting new business opportunities in the dense 22,000-word CCP document released last week.

It contained the reform "decisions" approved at a policy summit charting China's growth path for the next decade. Other reform pledges include giving a bigger role to markets in allocating resources; reforming tax systems to redistribute incomes; and creating a more level playing field for private investors pitted against state-owned enterprises.

When implemented fully, these "will have a far-reaching impact on the global business community", said Mr Yew Sung Pei, assistant CEO of IE Singapore.

Observers like Mr Yew believe Singapore firms have an edge in sectors from education and finance to urban solutions such as master planning and eco-technology. They have a reputation for creating quality products in these industries, and adapting them to the China market.

Mr Thomas Chua, president of the Singapore Chinese Chamber of Commerce and Industry, believes Singapore's experience and capability in the service sector would be an advantage as China liberalises banking, health care and e-commerce.

A key highlight of the reform pledges is the elevation of the market's role in allocating resources from "basic" to "decisive". This could mean lifting government price controls on inputs such as electricity and water, allowing private players like Sembcorp to compete on price for a bigger market share.

Mr Alan Yau, CEO of Semb-corp China with 23 utilities operations in 11 provinces, expects the group to benefit from the liberalisation of water and power tariffs.

Controls over interest and exchange rates are also expected to be lifted over time, giving private players more scope to compete with state-owned banks.

All these will benefit Singapore banks such as United Overseas Bank, which is growing its China operations by setting up shop in the Shanghai free trade zone (FTZ). It has just been given the go-ahead for the FTZ, prompting the bank's China CEO Eric Lian to say: "The efficiency in which (we) received official regulatory approval for our branch... is testament to the ease of expanding our business into the FTZ."

Meanwhile, China's pledge to pursue more sustainable growth bodes well for firms such as Keppel Group, whose China operations include building eco-friendly homes like those in the flagship Sino-Singapore Tianjin Eco-City.

Still, Singapore investors have been careful to temper their enthusiasm since there are not many details about the reform plan, which could take years to implement. Endorsement for a nationwide property tax, for instance, could affect property developers by moderating demand and price rises, particularly for higher-end real estate.

Property players are generally undaunted. Said CapitaLand China CEO Jason Leow: "This tax policy on the residential business has been anticipated for some time and will not affect our confidence in the China market, given our balanced real estate portfolio."

China's move to lower barriers for entry could also intensify competition for Singapore investors. For instance, a relaxed one-child policy could see a rise in supply of pre-school operators, said Dr Richard Yen, founder of e-learning solutions firm Ednovation.

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