Foreign companies keen to expand business in China despite pandemic

0 Comment(s)Print E-mail Xinhua, March 17, 2022
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Press conference on the release of 2022 White Paper on the Business Environment in China & 2022 Special Report on the State of Business in South China held by the American Chamber of Commerce in South China (AmCham South China), in Guangzhou, south China's Guangdong Province, on March 1, 2022. [Photo/Xinhua]

Despite the protracted COVID-19 pandemic and the downward pressure on the macro-economy, foreign companies are optimistic about the Chinese market and plan to further expand their investment in China.

Foreign enterprises have faith in the comprehensive competitive advantages of China over market size, industrial support and business environment, according to the 2022 Special Report on the State of Business in South China, released by the American Chamber of Commerce in South China (AmCham South China) on March 1.

More than 70 percent of the assessed companies have reinvestment plans in China for 2022. Roughly 72 percent of the companies intend to expand in China over the next three years, with the estimated reinvestment reaching 26.5 billion U.S. dollars, the report said.

A promising investment prospect, high return and excellent environment have turbocharged the investment of foreign enterprises in China.

Strong investment will

In the Nansha District of Guangzhou, capital of south China's Guangdong Province, a factory expansion project announced in 2021 by a subsidiary of French chemical producer Arkema, is now moving in full swing. Slated to start operation in 2023, the expanded facility is expected to help double the factory's production capacity of UV curing resin.

Besides selling its products to China, Arkema has built 10 production bases and two research and development centers in the country over the past two decades. The new production plant will allow the company to provide its customers and partners in Asia with the latest product solutions and tailored services, said Laurent Peyronneau, vice president of Arkema's coating solutions.

In Guangzhou, the host city of the China Import and Export Fair (known as Canton Fair), multinational companies including LG, ZEISS, AstraZeneca, Panasonic and Mars Wrigley have been launching new projects or adding production lines.

People visit the 130th session of the China Import and Export Fair, or the Canton Fair, in Guangzhou, south China's Guangdong Province, Oct. 15, 2021. [Photo/Xinhua]

A total of 4,048 foreign-funded enterprises were newly established in Guangzhou in 2021, up 50.2 percent year on year. Among them, the service industry, new energy, intelligent vehicle and bio-pharmacy sectors saw a significant increase in foreign investment utilization, according to statistics from the Guangzhou Municipal Commerce Bureau.

The Ministry of Commerce said Monday that foreign direct investment into the Chinese mainland, in actual use, expanded 37.9 percent year on year to 243.7 billion yuan in the January-February period. In U.S. dollar terms, the inflow went up 45.2 percent year on year to 37.86 billion dollars.

Among the total, the service industry saw FDI inflows jump by 24 percent year on year to 175.7 billion yuan (about 27.6 billion U.S. dollars), while that of high-tech industries surged by 73.8 percent from a year earlier, data from the ministry showed.

"China is still the NO. 1 destination for every investment by our members," said Harley Seyedin, president of AmCham South China, adding that the fastest growing investment areas are the services areas and financial areas.

An overwhelming majority of the assessed companies choose China as one of the preferred investment destinations, the report noted, adding that China will be the priority for over half the professional services companies.

Consulting firm Ernst & Young (EY) has been operating in China for more than 40 years. William Huang, managing partner at EY China South, said the company will continue to deepen and expand its business in China. In 2022, EY will develop with a focus on the advantages of the Guangdong-Hong Kong-Macao Greater Bay Area, such as technological innovation, financial openness and green and sustainable development.

Stable prospects, better environment

Even in the face of intensified competition and increased cost, the Chinese market sees robust growth potential. The stable business environment and industrial clustering effects have enhanced China's attractiveness to foreign investment.

Bekar Mikaberidze (R), founder of Belt and Road Georgian Business House, introduces products to customers in Guangzhou, south China's Guangdong Province, February 2022. [Photo/Xinhua]

For many foreign companies, China is the "main engine" of their global profit growth. According to the report, 63 percent of the assessed enterprises saw their revenues increase in 2021, which returned to the pre-COVID levels, while 82 percent of them achieved profits in China.

The report shows that 58 percent of the respondents consider their overall return on investment in China to be higher than other places. "China is the fastest-growing market in the world and continues to open up for foreign investment. New opportunities are being created here almost every day," said Seyedin.

China's adherence to the dynamic zero-COVID policy and stringent anti-virus measures have proved effective and helped curb COVID-19 infections quickly, thus ensuring the resumption of normal life.

The National Health Commission has sent work teams to regions where the recent resurgence of infections was reported in order to help local authorities implement targeted epidemic-control measures and contain cluster infections.

"The Chinese market is popular, big and safe. At present, enterprises at home and abroad are treated equally and reasonably. They have a warm feeling of protection," said Bekar Mikaberidze, founder of Belt and Road Georgian Business House.

"With local technology upgrades and new orders from new energy vehicle companies, we are more confident to achieve the sales target of 800 million yuan in 2022," said Zhong Minghui, a vice section chief with the TACHI-S Trim (Guangzhou) Co., Ltd.

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