Manufacturing News

Multinational companies upbeat about Chinese market

Senior multinational executives have shown confidence in the investment climate in China amid concerns that the business environment is deteriorating.

During the two-day China Development Forum 2015 in Beijing, which concluded Monday, business leaders said the "new normal" may bring difficulties, but China's transition drive and reform efforts could create new opportunities.


Following Microsoft announcing that it would shut its China mobile phone production lines, the question of whether China was losing its glamour to foreign investors became a hotly discussed issue again, after Japanese watch maker Citizen suddenly closed its Guangzhou branch in February.

Earlier reports also showed that foreign-funded garment and shoe factories in southern coastal provinces were leaving China.

Despite this grim backdrop, the mood at the China Development Forum painted a more positive picture.

Japanese auto company Infiniti, which established its global headquarters in Hong Kong three years ago, is planning to invest more in the world's second largest economy and is ready to introduce more of its advanced technology to the market.

"China is definitely one of our most important markets," said Daniel Kirchert, managing director of Infiniti China, adding that he was quite optimistic about the prospects of the Chinese economy.

For insurance company AIA Group, China is among its top three markets globally and the insurer is working to make China the largest.

AIA CEO Mark Tucker said: "I think for us, the attractions [of China] get greater and we'll continue to invest."

The world's leading construction and mining equipment maker Caterpillar also expressed confidence in its China business at the forum.

"We are pretty happy with the state of our investment here," said Caterpillar Chairman Douglas Oberhelman, adding that his company will continue to concentrate on the Chinese market.
An annual global CEO survey by auditing firm PricewaterhouseCoopers (PWC) showed that 34 percent of over 1,300 companies surveyed said China was among their top-three overseas growth markets in 2015.

This indicates that China remains a magnet for foreign investment.

In 2014, global cross-border direct investment dropped 8 percent, but foreign direct investment (FDI) grew 1.7 percent, making China the world's largest FDI receiver, according to the Ministry of Commerce (MOC). A total of 23,778 foreign-funded enterprises were established last year, up 4.4 percent.

In the first two months of 2015, the growth in FDI and new foreign companies sped up to 17 percent and 38.6 percent, respectively.

MOC spokesman Shen Danyang said just a few multinational companies adjusted their investment in China due to rising labor costs, slowing economy and poor management.
"Generally speaking, foreign investment in China is stable and sound," said Shen.


Some foreign companies complained of losing a good business environment, citing stricter law enforcement, fewer preferential policies and rising resources costs.

Dennis Nally, chairman of PWC Int., said:"I think that's a natural consequence of the evolution of the economy."

However, the auditing firm believes, this evolution will create a whole host of new opportunities.

Many companies are of the same opinion.

U.S. material firm Dow said China's current transition to an advanced manufacturing economy suited its business.

Dow Chairman Andrew Liveris said his business in China was unaffected as some 85 percent of the materials sold in China were high-tech, where growth remains robust.

"China is moving from being an exporter of basic materials to a consumer of high-tech. We are part of that because we have invested in high-tech and R&D in China," said Liveris.

AIA is also bullish about business prospects in anticipation that the services sector, including life insurance service, will further expand, thanks to continued government support.

"We are very keen to continue to grow and develop our business, and our people, in China," said Tucker.

To reinforce China's opening-up, Premier Li Keqiang vowed in his government work report to continue to solicit foreign investment in "a more active and effective way."

"China will stick to its commitments," said Commerce Minister Gao Hucheng at the forum, adding that the government will open up more opportunities in the advanced manufacturing and modern services sectors.

The China guidance for foreign investment was revised earlier this month to relax many restrictions on overseas capital.

Along with freer market access, Gao said the government will also amend laws and improve regulations to build a level playing field for all market participants.

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