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China market still a magnet for US companies Release date: 2023-11-17    Source:China Daily

Multinationals drawn in by supply chains and commitment to country's opening-up

China's enduring attractiveness to United States-based multinational corporations will persist, driven by this country's strong domestic market and steadfast commitment to opening-up, according to market watchers and business executives.

The trend was evidenced by the representation of more than 200 US companies at the sixth China International Import Expo in Shanghai earlier this month. The exhibitors, including Qualcomm, Pfizer, Nike, Cargill, Ford Motor and Dow, formed the largest US delegation in the CIIE's history, according to information released by the American Chamber of Commerce in Shanghai.

US business leaders from healthcare, the automotive sector, technology, consumer goods, and agriculture said China's increasing appeal will continue due to its massive market size, deeply integrated supply chains and unwavering dedication to opening up its economy.

Zhou Mi, a senior researcher at the Chinese Academy of International Trade and Economic Cooperation in Beijing, said that despite subdued global investment sentiment, US companies maintain confidence in investing in China and firmly believe technological innovations represent the most significant growth opportunities in the Chinese market for the foreseeable future.

A similar view was expressed by Wang Huiyao, president of the Beijing-based Center for China and Globalization think tank, who said: "China's vast and peaceful market, coupled with its recent initiatives to implement measures that expand market access for global investors in critical areas, including easing restrictions on foreign investment in listed companies, will present global companies with increased growth opportunities."

GE Vernova, a US energy company, has already headed in that direction. It plans to deploy more resources in areas such as power generation, wind power development and electrification in China to maintain robust growth in the coming years.

"China has been and will continue to be one of the most important markets for GE Vernova and we will maintain firm determination and commitment to cultivate this big and dynamic market," said Ramesh Singaram, president and CEO of GE Vernova Gas Power in Asia.

"Localization serves as the cornerstone and fundamental strategy of GE Vernova's growth in China and we will continue to bring the most suitable technology and equipment here," he said.

The company has entered into long-term and diversified collaborations with leading local companies in the industry and has shared its expertise and management experience with them. It has a partnership with Harbin Electric Corporation — General Harbin Electric Gas Turbine — dating back more than two decades, and the joint venture established by the two sides was put into operation in 2020, creating GE Vernova's only heavy-duty gas turbine manufacturing base in Asia.

As one of the first global energy equipment and service providers to enter the Chinese market, GE Vernova has over 5,000 employees in more than 10 offices and manufacturing sites across the country.

Lyu Shuping, president for China and Asia at Xylem Inc, a Washington DC-headquartered water technology provider, said China's steadfast commitment to long-term high-level openness and the ongoing green transformation will generate lucrative opportunities for multinational corporations in its market. As China is committed to achieving carbon neutrality through industrial transformation and sustainable development, these innovations are being employed within China and diverse global markets, Lyu said.

After putting its latest innovation center into operation in Shanghai in March and gaining the largest customized pump application order in China last year, Xylem sees huge opportunities in tech innovation, infrastructure, high-end manufacturing and green development, Lyu said.

"Take wastewater treatment for example. China has transformed into a new model of pollution control with more precision and accuracy than many years ago as intelligence and energy efficiency have become major trends for the water sector. Among these trends, digitalization will of course play a critical role," she added.

Eyeing a consumption uptrend, Liu Chang, vice-president of Cargill Investments (China), the Chinese branch of US agriculture and food multinational Cargill Inc, noted that "nearly one-fifth of Cargill's consumers are in China, and the country is an extremely important market for us".

"Whether raw materials or processed goods, China's vast consumer base provides a huge market for agricultural products, giving the country a core position in the global agricultural supply chain," Liu said.

To better understand the views of US business leaders, Commerce Minister Wang Wentao has met with the likes of Tim Cook, CEO of Apple Inc; Sanjay Mehrotra, president and CEO of Micron Technology Inc; and Dave Ricks, chairman and CEO of Eli Lilly and Company this year in Beijing. Wang has also hosted a number of symposiums and roundtables for foreign-funded enterprises in Beijing and other Chinese cities.

"What foreign business executives talk about most is that they attach great importance to the Chinese market. This market has a huge scale, strong innovation vitality and a continually improved business environment," said Wang.

Echoing that sentiment, Sally Loh, president for the China unit at Otis Worldwide Corp, a Connecticut-headquartered elevator manufacturer, said the Chinese market is a key contributor to the group's global business performance.

"China remains the industry's largest new equipment market with substantial opportunities for service business despite intense competition. We view the country as a long-term market with continuing urbanization, infrastructure building and urban renewal," Loh said, adding that the company will continue to invest in future technology with a focus on safety and sustainability to serve both Chinese and other markets.

Benefiting from its massive market, well-developed industrial system and strong supply chain competitiveness, China saw the flow of foreign direct investment in its manufacturing sector increase to 262.41 billion yuan ($36.2 billion) in the first three quarters of this year, up 2.4 percent year-on-year, with FDI in high-tech manufacturing up 12.8 percent, according to data from the Ministry of Commerce.

Meanwhile, a survey released by Beijing-headquartered China Council for the Promotion of International Trade revealed that nearly 90 percent of foreign companies expect their profits to remain stable or increase in China over the next five years, with a large number of them identifying technological innovation as the primary growth opportunity in the Chinese market.

The survey, involving 700 foreign companies, found that over 80 percent of respondents were satisfied with China's business environment in the third quarter of 2023, and about 80 percent anticipate their profits will remain stable or improve this year.