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MNCs feeling buoyant about China in 2022 Release date: 2022-01-13    Source:China Daily

Editor's Note: The Chinese economy has managed to withstand a slew of challenges in the past year, and policy priority in 2022 will focus on maintaining stable growth as identified by top policymakers at the annual tone-setting Central Economic Work Conference in December. China Daily talked to multinational executives on how they view the prospects for the Chinese economy and how they will align their business strategies with China's efforts to deepen reforms and push for high-quality development.

Q1: The year 2021 has seen the global economy withstand a variety of challenges in the form of COVID woes, trade disruptions, energy shortages, a roller coaster in commodities, high shipping costs and geopolitical tensions. Against such a background, what is your assessment of China's economic growth prospects in 2022 and beyond?

Q2: Within the macro context discussed earlier, how do you see your company's performance in China and future prospects relative to your global operations?

Q3: How do you view recent key meetings in China that have reinforced the country's sustained commitment to reform, opening-up, equal treatment for foreign businesses, and more measures to attract MNCs and foreign investors? What else should China do in this direction, especially in terms of surmounting potential barriers?

Q4: What is your view on China's net zero efforts (carbon goals), especially from the standpoint of potential new business opportunities they may spawn?

Q5: The question-"Is China still investable?"-has popped up in popular media discourse after the recent big-ticket regulatory changes (like antitrust/anti-monopoly measures and steps to preempt a possible debt bubble in property). How would you answer that question? Does China remain attractive for your business?

Alexander Dony, president for China, BSH Home Appliances

A1 We feel that China has a positive outlook for the year 2022 that should create opportunities for domestic and foreign enterprises alike. Its growth prospects are supported by its complete industrial chain, rich human resources, convenient infrastructure and a huge domestic market. The fact that China is willing to further open up means that foreign companies will have more areas where they can compete and which should ultimately benefit the Chinese consumers.

A2 BSH has been rooted in China for over 20 years. China is a truly exciting market, as well as one of the worlds' biggest and most dynamic home appliance markets, and one of the most important markets for BSH.

Looking ahead, we will continue to deepen our understanding of Chinese consumer insights and adhere to our BSH China strategy of "developed in China, and for the rest of the world". This means that we are introducing cutting-edge innovation and technology into China first and foremost for the benefit of Chinese consumers, and consequently for the benefit of global consumers.

A3 Our sentiment on the recent key meetings, which include the Central Economic Work Conference, is positive. We deeply feel that China's business environment continues to improve.

China has been actively building platforms that offer foreign companies greater opportunities to communicate and cooperate. Take the China International Import Expo (CIIE) as an example. BSH has participated and exhibited at CIIE for four consecutive years. Through this platform, we are able to get closer than ever to consumers and get first-hand feedback on our products, thus gaining a better understanding of Chinese consumers' actual needs.

A4 We are a major advocate of sustainable development. With China increasing its promotion of the"3060" carbon goals, Chinese consumers are increasingly paying attention to sustainable lifestyles. To respond to this demand, BSH will continue to leverage our expertise, and accelerate efforts to develop even more water and energy saving products.

A5 China is one of the most important markets for BSH, and we expect its importance to grow further. The country has two unparalleled advantages. First and foremost, it is its sheer number of consumers. Chinese consumers are increasingly discerning in pursuing the very best quality of products and services, and are also displaying a great willingness to pay for them. This plays very much to BSH's premium product offerings, and will also benefit BSH in other countries. Secondly, cutting-edge technologies are welcomed in China. This has led BSH to continue to increase its investments.

Steven Lien, president of Honeywell China and Aerospace Asia-Pacific

A1 We believe China has the conditions and capabilities to keep the economy running within a reasonable range this year despite headwinds. As stability is the key word in the economic plan that was laid out at the recently concluded Central Economic Work Conference, we expect prudent and effective macro policies, enhancing support for innovation in science and technology, and vitalizing development through further opening-up.

We are optimistic about China's economic growth and believe the importance of the Chinese market will further grow.

A2 Among all of the markets in which Honeywell operates and develops, our growth in China continues to be robust with a strong market position. China has developed into Honeywell's second largest single market and the company's largest growth market. China's opening-up efforts and its focus on sustainability and digitalization create a very favorable investment environment and business opportunities for Honeywell.

A3 China has mapped out the priorities for its economic policy in 2022 at the recently concluded annual Central Economic Work Conference, stressing stability and more focus on supporting growth. It is encouraging that the conference has stated that the nation will promote institutional opening-up, better implement national treatment for foreign enterprises, attract more multinational companies to invest, and promote the early implementation of major foreign investment projects.

A4 Honeywell is uniquely positioned to shape a more sustainable future in China together with local partners. In fact, about half of Honeywell's new product introduction research and development investment is directed toward products that improve environmental and social outcomes for customers.

A5 According to data released by the Ministry of Commerce, foreign direct investment into the Chinese mainland rose 15.9 percent year-on-year in the first 11 months of 2021. It has shown that China's improving business environment and market resilience have maintained the confidence of foreign companies to invest and develop in China.

In 2021, Honeywell continued to expand its investment in China. For example, Honeywell Building Technologies business group launched its new innovation center in Xixian New District of Xi'an. The center leverages Honeywell's innovative R&D capabilities to enable the digitalization in western China, and further fulfill Honeywell's commitment to long-term development in China.

Allan Gabor, president of Merck China and managing director of Merck Electronics China

A1 In the face of such a global environment with complexities and uncertainties, China achieved economic growth well above its target in 2020 and 2021. This shows a prospective potential in 2022. We appreciate China's great efforts to achieve high-quality development, and firmly believe there will be emerging markets and growing opportunities nationwide grounded on all levels of endeavor, even though there are pressing challenges in the future.

A2 To accelerate the implementation process of our "In China, with China" strategy, we have made great achievements and reached important milestones this year. With the double-digit growth rates nationwide recently, China became our second-strongest growth driver and second-largest sales market worldwide. As a strategic market, China keeps contributing to our global performance, which enables us to raise our outlook for value chain investment and further localization approach in the long run.

A3 With the sustained commitment and more supportive measures, a favorable internal environment for foreign business has been shaped and more potential has been cultivated. Externally, on the other hand, international cooperation has been promoted, even during the pandemic. These strategies and measures help bolster market confidence and contribute to a positive dual circulation. To further leverage the national platform and seize new opportunities, a series of proactive policies and an innovative pattern of high-quality development are expected, which allow us to give full play to our advantages and nurture business potential based on the requirements of development nationwide.

A4 In the context of Green China, we need to ramp up joint efforts at all levels and seek pathways to encourage endeavors nationwide. For Merck, carbon neutrality is also a key focus and part of our group strategy. We plan to achieve our sustainable goal of water management, carbon neutralization and waste recycling by 2030, 2040 and 2050, respectively, and extend our footprint in electronics to empower digital transformation and greater integration with innovation in the new era.

A5 The short answer is yes. In fact, the policy changes will play a key part in sustainable development in the long term, fostering a high-quality business environment. Still, it's critical to give priority to the focus sector in line with the big picture, such as localization and decarbonization. We continue to believe China can offer superior growth and vital opportunities, and will expand investment in business and hiring. In our Electronics, for instance, as part of our Level Up program, we plan to invest over 3 billion euros ($3.39 billion) up to the end of 2025 and China is certainly in the plan.

Zhou Xiaolan, president of Bayer Group China

A1 When it comes to 2022 and beyond, we foresee continued growth stability and resilience in China's economy under key priorities of the 14th Five-Year Plan (2021-25) which underscores a commitment to the "dual circulation" concept for economic development, driven by reform and innovation to promote stability and "high-quality development" in China.

A2 Despite challenges and uncertainties last year, our business saw a strong rebound from 2020 and reported encouraging results. As the largest market for Bayer Pharmaceuticals and the second largest for Bayer Consumer Health, China has become one of the most important pillars of Bayer's global business. We expect to carry this promising momentum into this year and beyond.

A3 Bayer supports China's determination to promote economic globalization and opening-up. Thanks to China's efforts to accelerate innovation and improve the business environment in recent years, Bayer has been able to bring in the latest innovative products and solutions to China faster. This includes Bayer Continuous Glucose Monitoring System (CGMs)-an all-new model for intelligent diabetes disease management which was introduced at the Boao Lecheng International Medical Tourism Pilot Zone in 2021.

A4 Contributing to sustainable development has always been a core element of Bayer's corporate strategy and of our core values. We promote inclusive growth and a responsible use of resources to help people and the planet thrive. Bayer is committed to stepping up our efforts in sustainability and helping to resolve major challenges of our times. Bayer launched in September our first Asia-Pacific Forward Farm in China, which plays an innovative and leading role in our sustainability efforts.

A5 The answer is an obvious YES. Our business in China is key to our current and future success. As the business environment continues to improve in China in terms of strengthened IP protections and the roll-out of encouraging laws and regulations, e.g. to accelerate the review and approval of new drugs, we will continue to increase our investment here as we lead and redefine innovation in life sciences.

For example, despite the challenges brought by the pandemic last year, Bayer kicked off the capacity expansion project of our Pharmaceuticals Product Supply Beijing Site. With an investment of more than 50 million euros ($56.49 million), the planned project is designed to increase the production capacity and accelerate the implementation of innovative digital solutions, in order to ensure a reliable supply of high-quality prescription drugs for more Chinese patients.

Fabrice Megarbane, president of L'Oreal North Asia Zone and CEO of L'Oreal China

A1 Despite the difficulties and pressure, we are impressed by China's stable economic recovery and strong resilience.

Even in the face of various challenges in 2021, China continues to make the market more stable, open and fair. A better business environment is one of the best proofs of China's growing economic development, and L'Oreal is benefiting a lot from it. We also believe that China's economy will continue to grow steadily in the future, with sustained efforts across the board in science and technology innovation, integrated regional development, rural revitalization, and industrial structure optimization and upgrading.

A2 The world's opportunity is China's opportunity and vice versa.

As the second largest market of L'Oreal Group, China has huge potential with people's increasing aspiration for beauty especially with the world's largest middle-income group. For the L'Oreal group, China has already become seven brands' largest market in the world and the headquarters of North Asia. We hope to drive the development of the "Beauty Triangle" and leverage regional synergy with China's opportunities and contribute more "China wisdom" to the global market.

A3 The implementation of the Foreign Investment Law and many important initiatives of opening-up such as the Free Trade Area and CIIE reflected China's determination to continuously open up and optimize the business environment.

We wish to see some pilot projects aiming for boosting the dual-circulation development pattern, and also help multinational companies to interpret and customize business opportunities and new models that are suitable for companies to play a greater role in China, for China and for the world.

A4 The commitment by China to be carbon neutral by 2060 represents a major milestone for the fight against climate change. I am impressed to witness the strong mobilization taking place across industries following this announcement. This should stimulate innovation and economic development in all sectors related to energy efficiency and clean energy.

A5 We believe China is investable for our business as always.

Changes like anti-monopoly are common practices in market economy countries. We believe that strengthening anti-monopoly and anti-unfair competition is an important and regular task of the Chinese government. It is conducive to promoting the formation of a fair competitive market environment, creating a broad space for the development of various market players, especially small and medium-sized enterprises, and better protecting the rights and interests of consumers.

Tetsuro Homma, executive vice-president of Panasonic Group

A1 As the world's second-largest economy, China has gradually transformed into a major country in terms of consumption, engineering and innovation, while remaining a manufacturing powerhouse. The Chinese market has obvious advantages in the fields of market size, talent, innovation and intelligence. After experiencing various challenges, we have seen the resilience of the Chinese economy. China's reform and opening-up process continues to advance. I believe these factors will help bolster China's economic development in the future.

A2 China is the only country that has achieved positive economic growth since April 2020, and even in the Panasonic Group, only China unit has achieved growth in business performance, spearheading growth across the globe. Panasonic's business in China is still on the growth track in 2021, along with the economic recovery in other countries. Although there will be more uncertainties and unpredictable situations in 2022, we are confident of our business growth in China.

A3 Panasonic has witnessed China's reform and opening-up since the establishment of our first joint venture in China in 1987. It is of utmost importance to maintain the direction of reform and opening-up. In this sense, we are paying attention to the Central Economic Work Conference. I fully understand that the strict prevention and control measures related to COVID-19 pandemic will be maintained in 2022, and I hope visa issuances for Japanese whose family members have been dispatched to work in China could be relaxed.

A4 I think China's "dual carbon" goals are very challenging. Panasonic carries out various businesses in a more environmentally friendly and green way to contribute to carbon neutrality. We are making efforts to build environmentally friendly stores, provide hydrogen energy batteries, and achieve energy saving and emissions reduction through the use of heat pumps and compressors. Panasonic has more than 20 years of experience in hydrogen energy. There have been successful commercial cases of hydrogen production from natural gas. We hope to bring this technology to China and strive to use hydrogen energy in Chinese factories in 2022.

A5 In Panasonic's global investment layout, we pay more attention to the huge market demand, a complete industrial chain, strong acceptance of new technologies, and the huge advantages and potential for economic development. Therefore, Panasonic will continue to explore China as an important global market. In addition, we know that the government is strengthening the supervision of companies that use consumer data in a monopolistic manner, and we are not worried about this.

Samantha Zhu, chairperson of Accenture China and member of Accenture's Global Management Committee

A1 China has proven its strong resilience and ability to recover and grow amid the complex environment. The country is on the right trajectory to further deepen its transformation in both public and private sectors, upgrade supply side, and unleash consumption potential.

In 2022 and beyond when the world shifts to reinventing what comes next, the growth pattern for the country and businesses will be more than walking a known path-focusing on market opportunities and exploring new ways of operating, but will depend on a truly differentiated change agenda, for example, prioritizing environmental and social impact, people empowerment and well-being, and new business foundations.

A2 China is a key strategic market for Accenture. Our ability to capitalize on the market opportunity and drive the digital transformation agenda is reflected in the continued growth of our business in China. This is the result of having executed for years a strategy to rotate our business to digital and cloud, hiring and upskilling people across China, and fostering deep relationships with leading local companies and technology partners.

A3 From these recent meetings that define the future of China's economy, we can clearly observe that the country has strong determination and commitment to further open up-lifting administrative and technological barriers to accelerate innovation and boost productivity. China's vast and dynamic market is an ideal place to match new worldwide demand and supplies at scale. With its vigorous digital economy, foreign investors and companies can explore the latest digital applications across various industries in China and share those innovations and best practices worldwide.

A4 China's commitment and efforts to its carbon goals and net-zero emissions remind everyone that this is the moment for business, government and society to come together to transform the economy into one that works for the benefit of all.

Accenture believes sustainability is the new digital. We are witnessing organizations taking further moves to help transition industries to low-carbon energy, reduce the carbon footprint of IT, cloud and software, design and deliver net-zero circular supply chains, integrate sustainable practices into the ecosystem, and reskill workforces among others.

A5 The business environment in China is constantly improving and the country is a fertile soil for foreign businesses like us to accelerate innovation, boost productivity and grow with local companies and partners. Accenture has been operating in China for 35 years and is the witness, beneficiary of and contributor to this land. We can feel and see the vigor that the opening-up is bringing to China's economy, and will continue to bring our most advanced concepts, capabilities and technologies to the Chinese market.