Global MNCs drive gains in Shanghai's advanced manufacturing sector

Amid the rapid development of local advanced manufacturing, multinational corporations are grabbing investment opportunities to boost innovation and expand capacities in their Shanghai plants and research and development centers.

Signify, formerly known as Philips Lighting, got its products into the Chinese market as early as 1920, and settled in Shanghai, establishing its first joint venture on the Chinese mainland in 1985.

"After about a century of development, China has become the 'second home market' of Signify, with nine plants and an R&D center built in China," said John Wang, president of Signify North East Asia and senior vice president of Signify.

The company also chose Shanghai as the location for its China headquarters, which was then upgraded to the Asia Pacific headquarters, Wang revealed, seeing it as "a further recognition of our continued investment and growth in Shanghai."

"The regional headquarters in Shanghai not only serves the Chinese mainland market, but also provides a variety of support services to the rest of the markets in the Asia Pacific region."

With increasingly more emphasis laid on R&D, Signify has set up its second largest in-house R&D center in the world in Shanghai, which undertakes about 90 percent of Signify's global R&D tasks.

The company, seeing China as a strategically important market, has kept investing in the Chinese mainland.

Since an independent initial public offering in 2016, it has completed several strategic mergers and acquisitions in the professional and consumer lighting sector, including the acquisition of Chinese lighting companies Zhejiang Klite and Shenzhen LiteMagic. It has also established joint ventures with Chinese technology giant Xiaomi and e-commerce firm Baozun.

It is undeniable that the resurgence of the COVID-19 pandemic in the first half-year has impacted the entire industrial chain of the lighting industry. But Signify has seen its various lines of businesses recover steadily, with the company's global comparable sales increasing by 5 percent in the second quarter, according to company's quarterly report.

"As always, Signify has got strong support from Shanghai authorities," Wang noted.

"We have been investing and developing in the city for many years, and have been significantly benefiting from the strong measures of Shanghai's continuous efforts to optimize the business environment, attract investment and innovation talent, and guide the multinational headquarters here to upgrade their capabilities and expand their functions, as well as deeply integrate into the global industrial, value and innovation chains."

Air Liquide, a French multinational company supplying industrial gases and services, has also invested in Shanghai for decades.

With the support of the Shanghai government, Air Liquide became one of the first MNCs to obtain a wholly foreign-owned business license in China in 1989, setting up its first wholly-owned subsidiary in Shanghai's Caohejing Hi-Tech Park to serve the local electronics industry. It then established Air Liquide (China) Holding Co Ltd in the China (Shanghai) Pilot Free Trade Zone in 2004.

The company, with about a dozen offices and plants in Shanghai, currently serves nearly 2,500 companies of various sizes as clients in the city.

Echoing the development of Shanghai's headquarters economy, the group has set up its China headquarters in the city, and has continued to expand its investment in China in line with its global strategic layout, which aims to play a role in grooming talent, expanding financing, and fostering innovation and R&D, according to Nicolas Poirot, president and CEO of Air Liquide (China) Holding Co Ltd.

As Shanghai is an important market for Air Liquide's business development, the company will continue to seek investment opportunities in key areas of hydrogen energy, electronics and high technology, and is willing to build cooperation and partnerships with local companies and institutions, Poirot suggested.

With a recap of the past over 30 years' investment and development in Shanghai, the company deeply feels that the city is constantly learning from the international first-class business environment, improving services, boosting high-quality development and shaping high-level openness.

Poirot highlighted some major changes in Shanghai's investment environment, including the supportive policies and systems, the establishment of platforms for communication between businesses and authorities, and the continuity, transparency and stability of policies and measures.

German specialty chemicals company Evonik Industries, meanwhile, formed ties with Shanghai as early as the 1930s, with Degussa, the predecessor of Evonik, setting up its first office in the city in 1933.

The company now has its China headquarters in Shanghai's Xinzhuang, Minhang District.

Its Xinzhuang base, which was originally set up as an R&D center in 2004 and was expanded several times in 2007, 2013 and 2018, got a big upgrade in 2021 and was renamed as Evonik Shanghai Innovation Park.

As one of the company's six core R&D bases, the innovation park in Shanghai combines basic research, product development, process development, pilot plant, application technology, testing and analysis services as well as venture capital activities, said Xia Fuliang, president of Evonik in China and head of Smart Materials Asia. The aim is to meet local, Asia-Pacific and global R&D needs.

It also set up a multi-user site at Shanghai Chemical Industry Park in 2004 equipped with leading technologies, advanced equipments and shared infrastructure, which is now Evonik's biggest production site in China, covering a total area of over 400,000 square meters.

The cumulative R&D investment in the innovation park in Shanghai now exceeds 45 million euros (US$43.37 million), while the cumulative investment in the multi-user site tops 700 million euros.

"We are continuously strengthening our local presence and increasing our investment in local innovation and production capabilities," Xia added.

The company is expanding and building new R&D facilities, aiming to strengthen its R&D capabilities in specific technologies such as lithium-ion battery materials, high-performance polymers, and specialty ingredient formulation technologies for cosmetics and cleaning products.

This is to meet the demand of growing sectors such as new-energy vehicles, green manufacturing, additive manufacturing, and consumer products, Xia pointed out.

The R&D team at its Shanghai innovation park is set to double by 2027 as local innovation capacity grows.