The visit of Chinese vice president Xi Jinping to Sofia was overshadowed to some extent by the almost simultaneous arrival of Silvio Berlusconi in Bulgaria on October 16 2009, a day after Xi met Bulgarian Prime Minister Boiko Borissov and President Georgi Purvanov.

The occasion was largely relegated in importance by most of Bulgaria’s media, but the official visit of China’s vice president, commemorating the 60th anniversary of the establishment of the People’s Republic of China and diplomatic relations with Bulgaria, was hailed as an important mark on the Bulgarian political and economic relationship with the world’s most populous country and third largest economy.

During his address, Xi hailed the "strengthening of diplomatic and economic ties between both countries" following Purvanov’s visit to China in 2008. The key sectors of interest to Chinese firms in Bulgaria were telecommunications, tourism, logistics and infrastructure, mining and industry, Xi said.

According to the latest statistics, trade between China and Bulgaria was $1.3 billion in 2008, a figure that, Purvanov said, had to be developed and built upon further still. Imports from China were seven times the size of Bulgarian exports, but Purvanov said he expected "an increase of Chinese investments in the country because Bulgaria offers the best possible investment climate in the European Union".

Despite some criticism that Bulgarian businesses showed little interest in the Bulgarian-Chinese business forum, six contracts were signed on October 15 at a ceremony attended by Borissov, Purvanov and Xi.

Standout deal
The total worth of the contracts was reported to exceed $850 million, boosted by one major deal signed between China’s state-owned Minmetals and the Bulgarian subsidiary of German copper smelter Aurubis. Established in 1950, Minmetals’ core business is the exploitation, production and trading of metals and minerals.

Minmetals will buy refined electrolytic copper from Aurubis Bulgaria until 2015 in a deal that is worth up to $800 million. Aurubis Bulgaria is the former Cumerio Med, the Bulgarian subsidiary of Cumerio, which merged with Norddeutsche Affinerie last year to form Europe’s biggest copper smelter, Aurubis.

"Trade deals between state-owned entreprises like China Minmetals and Bulgaria are a positive sign that China has already started to expand its trade with Bulgaria," Xi said in a statement, as quoted by Reuters.

Aurubis is already one of Minmetals’s key partners, the Chinese corporation increasingly purchasing copper products from the Hamburg-headquartered copper smelter, reaching a record $95 million in the first half of 2009, according to Xi’s statement.

Under the terms of the six-year contract, Minmetals will buy up to 24 000 tons of copper a year at a fixed price of $5500 a ton. That amount would account for about two per cent of Aurubis’s total annual output, but would give a sizeable boost to Bulgarian exports to China.

According to SinoCast, a US-based commodities news service about China, Minmetals’ imports of copper products accounted for 37 per cent of Bulgaria’s total exports to China in the first seven months of 2009. That figure is expected to increase to more than 50 per cent for the full year.

Small fry
The other five deals signed during Xi’s visit came nowhere close to matching the Aurubis contract, but were still breaking new ground, considering the limited exposure of Bulgaria’s economy to Chinese firms.

China Nonferrous Metal Mining Group also signed a $19 million copper deal. The specifics of the contract and the details about future cooperation were not made public.

The CNMC businesses incorporates the development of nonferrous metal mineral resources, construction engineering, trade and development of technological services. The company styles itself a pioneer among Chinese enterprises to implement the ‘going abroad’ strategy and to carry out international investment and cooperation in the nonferrous metal mineral resources field.

Chinese transnational conglomerate Hengdian Group Co and Sviloza Yarn Co signed a $8.6 million deal, while Sinolight Corporation and Bulgaria’s Euromangan signed a $2 million contract. Sinolight Corp deals with fibre optical communication products used in telecommunication systems or data communication networks and related products for computer peripherals, as well as fibre optical subsystems used in industrial automation control and information transmission services.

Another eagerly-anticipated deal was Great Wall Motor Company signing the shareholder agreement with Bulgaria’s Litex Commerce on a joint venture to make Great Wall Motor cars in Lovech, in central Bulgaria. Great Wall Motor will pay $4 million for its stake in the company that is envisioned to manufacture sport utility vehicles that would be sold at a price of less than $15 000.

As China’s first private automobile enterprise listed on the Hong Kong Stock Exchange, the company has more than 30 subsidiaries and more than 22 000 people on its payroll. Great Wall Motor now manufactures sedans, sports utility vehicles and pickups, with an annual capacity of 400 000 complete vehicles.

A winner of numerous awards in China, Great Wall Motors has been looking into opening a production facility in Eastern Europe since 2006, agreeing a deal with Litex Commerce last year. The total output of its Bulgarian joint venture remains as yet undisclosed.

Bulgarian Development Bank (BDB) agreed two credit lines worth 35 million euro with the China Development Bank, with the memorandum for the first credit line, worth five million euro, signed by BDB chief executive Dimitar Dimitrov and the vice president of the Chinese lender, Zhao Jianping, on October 15. An agreement for the second credit line, worth 30 million euro, would be signed within a month, the BDB said in a statement.

BDB said that it would use the credit line to provide long-term loans to small businesses.

The two banks also discussed the prospect of creating a framework that would stimulate trade between Bulgaria and China. One proposal made by the Bulgarian side envisions the creation of a system whereby Chinese customers can purchase Bulgarian goods and pay over a period of 24 months, while the Bulgarian companies will receive their money from the Bulgarian Development Bank immediately following the transaction.

Lost opportunity?
Despite the assurances of Bulgarian officials that the country was interested in expanding bilateral economic relations with China, the business forum that was held as part of Xi’s visit has fallen short of expectations, one report said.

More than 170 Bulgarian companies had registered for the event, which featured 125 executives from Chinese firms, but the bilateral talks and contact exchanges were few and far between, Kapital weekly said.

Some Chinese executives were disappointed with the low interest and left early, but Bulgarian businesses complained of widespread confusion and insufficient information, as well as the language barrier problem, Kapital said.