Economic Watch: China remains an investment paradise for foreign capital

Foreign enterprises remain adamant in ramping up investment in the Chinese market, as the immense potential in economic vitality and consumption backed by an optimized COVID response strengthened their confidence in the world's second-largest economy.

In mid-January, French multinational Schneider Electric's secure power innovation lab was officially launched in Shanghai. The lab will shoulder the research and development responsibilities concerning key power supply and energy storage for the Chinese market and the rest of the world.

Yin Zheng, executive vice president of Schneider Electric's China & East Asia Operations, noted that China is not only a huge market but also a driving force for development and a source of innovation.

"Through continuous investment, China has become one of Schneider Electric's four R&D bases in the world, with more than 2,000 R&D staff and over 2,800 patents. At present, Schneider Electric has built five R&D centers in China, namely Beijing, Shanghai, Wuxi, Xi'an, and Shenzhen," Yin said.

Yin added that China's high-quality development direction and policies related to the "dual carbon" goals have opened up a huge space for the company's development.

"Facing the challenges of digitalization and decarbonization transformation, Chinese industries have an increasingly strong demand for green products and digital solutions. Schneider Electric's technical expertise is highly consistent with the direction of dual transformation, which brings a lot of opportunities for the development of Schneider Electric in China," Yin said, adding the company will continue to enhance its overall strength in China.

Swiss tech giant ABB also expressed a willingness to increase long-term investments in China, propelled by the confidence that the Chinese market will generate appealing opportunities in the years to come, according to James Zhao, senior vice president of ABB China, adding that China now is ABB's second largest market.

"Therefore, our investments in innovation and R&D in this market have always been sustainable and long-term. On the one hand, our products and industrial chain need to be upgraded so that our innovative technologies can better serve the Chinese market. On the other hand, in the field of manufacturing, we are working on further improving our manufacturing capacity, efficiency, and product quality," he noted.

In Xiamen, a coastal city in east China's Fujian Province, ABB will reinvest in a new production line utilizing its latest robotic and automated production technology to assemble and produce the switchgear cabinet with robots.

Zhao pointed out that ABB is full of confidence in the Chinese market, especially with China's commitment to high-quality development and low-carbon transformation, which will bring more development opportunities to all participants.

"China's current push for high-quality, green, and low-carbon development will unleash new growth drives. ABB will grasp the huge domestic market demand released in the field of new energy digital transformation and give full play to our technological advantages to provide customers and partners with more innovative technologies," he added.

Established in 1993, Linde (China) Forklift Truck Corp., Ltd., a subsidiary of KION Group, is a leading material handling equipment and solution providers.

As one of the earliest foreign enterprises in Xiamen, the company has achieved rapid growth and witnessed tremendous achievements over the past decades.

"We started from zero, from a few employees and a few hundred forklifts, and now we have more than 4,000 employees, as well as more than 60 branches, and more than 200 sales and service points in China. Last year, our overall sales volume reached 50,000 units," said Daryl Lean, vice president of strategy, marketing, and product management Asia Pacific at KION Group.

Since 2019, the group has launched a program named "China Second Home," aiming to set up a production footprint as well as global R&D centers to meet the strong demand of the Chinese and global markets.

Besides the strong confidence in the economy, the company also sees a few trends that are posting opportunities for the industry.

"For example, with the aging population and increasing labor costs, it would increase the demand for our forklift, as well as the automation equipment. At the same time, the government's effort in pushing for the 'carbon neutral' footprint and the Chinese companies' awareness of environmental control has increased the demand for electric trucks, especially new energy, which is one of the core competencies of the KION Group," said Lean.

Data released by the Ministry of Commerce shows that foreign direct investment in the Chinese mainland, in actual use, expanded 6.3 percent year on year to 1.23 trillion yuan in 2022. In U.S. dollar terms, the FDI inflow went up 8 percent year on year to 189.13 billion U.S. dollars.

Li Peigong, a professor at Shanghai Lixin University of Accounting and Finance, noted that at present, China's economic growth is positively projected, providing new opportunities for the development of foreign enterprises.

"China's market potential is being released at an accelerated pace, and foreign enterprises are actively tapping the market trends and speeding up their investment layout, which reflect their confidence and determination to cultivate the Chinese market," said Li.