Visitors gather at the Shiseido Group booth during the fifth China International Import Expo in Shanghai in November. [Photo/China Daily]
BEIJING – The COVID-19 outbreaks and downward economic pressures have presented short-term challenges for certain market participants in China in 2022. However, many foreign-funded companies have remained optimistic and have even increased their local investments, showing their confidence in the country’s growth in the long term.
In the first 11 months of 2022, China’s foreign direct investment totaled 1.156 trillion yuan ($170.6 billion), up 9.9 percent year on year. The amount has already exceeded the total for 2021.
Over 99 percent of foreign firms surveyed are confident about China’s economic prospects in 2023, and 98.7 percent said they would maintain and expand investments in China, according to a report by the China Council for the Promotion of International trade in the past month.
As China continues to expand domestic market demand, drive industrial innovation, and facilitate the circulation of domestic and international markets, many foreign-invested companies are trying to recalibrate their role in the country’s new development pattern and underline their long-term confidence in operating in China.
Finer consumer taste
Home to the world’s largest middle-income group, China’s GDP per capita has exceeded $12,000. “China is the most promising consumer market in the world with the optimization and improvement of consumption and modern production methods,” said Zhao Chenxin, deputy director of the National Development and Reform Commission, the country’s top economic regulator.
As Chinese consumers become more affluent, they tend to spend more on products and services that improve their lives, such as B. Health and beauty products.
Global pharmaceutical company AstraZeneca announced in June that it will establish a new regional headquarters and manufacturing and supply base in Qingdao, Shandong province, further expanding its regional footprint in the company’s second-largest market worldwide.
“During the containment of the pandemic, China has achieved comprehensive economic and social development, and finding such a balance is not easy. At the same time, the country has further deepened reforms across the board and taken effective measures to boost market confidence,” said Leon Wang, President of AstraZeneca China. “We can feel that China’s openness has never changed.”
In November, Japanese cosmetics giant Shiseido Group pledged to continue investing in the construction of its second-largest R&D center in China, backed by an innovation fund worth up to 1 billion yuan.
“We are full of confidence in the tremendous potential in China and are even more committed to our long-term investments in the market,” said Masahiko Uotani, CEO of Shiseido Group, calling China “an important growth driver” for the company’s development.
Contemporary “Made in China”
China has the most complete industrial system in the world. The country’s manufacturing industry accounts for 30 percent of the world’s total production, making it a major hub of the global manufacturing industry.
High-end manufacturing has become a major destination for foreign direct investment this year, and many foreign manufacturers have made China an innovation base. Official data showed that China’s actual utilized foreign investment in high-tech manufacturing rose 58.8 percent year-on-year from January to November.
German companies are big investors in the industry. BMW Group’s joint venture in China, BMW Brilliance Automotive Ltd, announced in November that it would invest 10 billion yuan in a new battery production project in Liaoning Province.
The new investment follows a phase of extensive modernization of BMW’s manufacturing base in the province, including a 15 billion yuan plant that opened in June 2022.
In late 2022, Swiss tech giant ABB opened a state-of-the-art robotics mega-factory in Shanghai. The massive manufacturing and research facility represents a $150 million investment in the world’s largest robotics market.
“Our innovative, automated and flexible factory plays a key role in our ‘in China, for China’ strategy and strengthens our entire value chain here,” said Sami Atiya, President of ABB Robotics and Discrete Automation.
Shared financial dividends
China’s stock, bond and futures markets rank second in the world in terms of size, while the country has opened up its financial markets further to share growth dividends.
China’s financial authorities have enacted regulations to encourage foreign institutional investors to make long-term investments in its bond market, give them more channels for foreign exchange hedging and facilitate mutual fund remittances.
The range of stocks eligible under the Stock Connect program between mainland China and Hong Kong will also be expanded, giving mainland and overseas investors broader direct access to each other’s stock markets.
In November, the country officially launched a private pension scheme, opening a lucrative new market for global banks and financial institutions.
“We are very optimistic about the level of capital inflow into the private fixed income market,” said Helen Huang, general manager of Fidelity International China. The company recently won approval from Chinese regulators to conduct retail banking in the country’s vast mutual fund industry, shortly after US wealth manager Neuberger Berman received the same regulatory nod.
“The market could attract 5 to 10 trillion yuan in 10 years,” Huang said.
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