Economic Watch: Foreign enterprises tap into China's evolving market
An aerial drone photo taken on May 16, 2024 shows the city test track of Volkswagen China Technology Company (VCTC) in Hefei, east China's Anhui Province. (Xinhua)
BEIJING, June 4 (Xinhua) -- Foreign investors are intensifying their presence in China by opening new stores, launching innovative products, signing more cooperation contracts, and building production plants and R&D centers.
In the first four months of 2024, the number of newly established foreign-invested enterprises in China rose 19.2 percent year on year to 16,805, data from the Ministry of Commerce shows.
A survey of more than 600 foreign-funded companies shows that over 70 percent of them are optimistic about the development prospects of the Chinese market over the next five years, and more than 50 percent believe the Chinese market has become more attractive, according to the China Council for the Promotion of International Trade.
The robust recovery of the Chinese economy, combined with the country's ever-improving business environment, has increasingly drawn the attention of foreign-invested companies, as they actively seek out new growth opportunities.
SEIZING OPPORTUNITIES IN CHANGING MARKET
The resilience of China's massive consumer market has left a strong impression on foreign investors, particularly amidst the lukewarm global recovery. The growth momentum in the market has made it increasingly attractive for multinationals to seize new opportunities by better adapting to market changes.
"We can feel the recovery of the consumer market in China," said Arjun Purkayastha, senior vice president of Reckitt Greater China, noting that the company's revenue in China rose in the first half of 2023 and the growth continued in the past few quarters across its brands.
China's tourism market rebounded quickly with the easing of Covid-19 prevention and control at the beginning of last year, and foreign-invested firms have made ambitious plans accordingly.
During the first quarter of this year, hotel group Marriott International reported a 6 percent year-on-year increase in average revenue per available room in the Greater China region. This growth outpaced the global average growth of the company, according to Mao Yibing, president of Marriott International Greater China.
Last year, Marriott signed nearly 100 hotel contracts in China, up 55 percent from 2022, according to Mao.
"China has a large population and vast market space, and the demand for diversified and high-end consumption is increasing day by day," said Frederico Freire Jardim, Asia president of U.S. food maker Kraft Heinz.
French retailer Decathlon recently launched its professional road bike brand to tap China's huge cycling market. The company has expanded its product line to more than 80 sports in recent years to support people in different age groups and with different abilities.
Vincent Boinay, president of L'Oreal North Asia Zone and CEO of L'Oreal China, said he is deeply impressed by the rapid changes in the Chinese market. To meet the growing demand in China's e-commerce market, L'Oreal opened its first self-built smart fulfillment center globally in Suzhou, Jiangsu Province, in April. The center can process 50 million direct-to-consumer orders and 17 million cases for business-to-business customers each year.
"China opportunity" is still the key word valued by foreign-funded enterprises, said Patricia Xia, consulting firm Ernst & Young (EY) China central managing partner, adding that these companies are still confident in the Chinese market and are exploring more opportunities in emerging industries and niche markets.
SHARING BENEFITS OF CHINA'S OPENING UP, INNOVATION
On May 31, Beijing passed its first special regulation on foreign investment, highlighting measures including promoting the secure and orderly cross-border flow of data, recognizing overseas vocational qualifications, and conducting regular consultations between local governments and foreign companies.
This exemplifies China's efforts to promote further opening up and boost its appeal to global investors.
This year, China has taken a series of measures to facilitate foreign investment, including rolling out national and pilot free trade zone versions of negative lists for cross-border trade in services, and simplifying visa application procedures for foreigners.
Talking about China's series of policies on facilitating foreign investment and the flow of people, Xia said such moves demonstrate the country's determination to continuously expand openness to the outside world, actively optimize the business environment for foreign investment, and promote cooperation and mutual benefits.
China's sound manufacturing industry and complete supply chain, coupled with a sustained and stable policy environment, provide a strong guarantee for foreign companies to strengthen their confidence in long-term investment in the country, said Leon Wang, executive vice president, chair and president of international region and China president of British biopharmaceutical company AstraZeneca, adding that the company always has confidence in China's market, manufacturing and innovation.
According to Xia, the Chinese market is not only a critical source of revenue for many foreign-invested enterprises but more importantly, an innovation hub to develop new solutions and intellectual properties benefiting global markets.
From 2012 to 2021, the R&D investment pooled by major foreign-funded industrial enterprises in China soared by 91.5 percent, and the number of valid invention patents grew from 68,000 to 241,000, statistics show.
The rapid development of artificial intelligence technology in China is of great help in the fields such as drug research and development, as well as molecule structure design, Wang said.
Reckitt is also willing to enhance R&D capabilities and invest in local talent to deliver more disruptive China-first innovations. By 2026, it plans to establish a Global R&D Center of Excellence in Shanghai, according to Purkayastha.
