China still a hot spot for foreign firms

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The 700th A320 aircraft is delivered at the Airbus final assembly line in Tianjin in July (LI RAN / XINHUA)

China’s constantly improving business environment is boosting its attractiveness among multinational corporations, which is reflected by the increasing number of MNCs planning to expand their presence in the world’s second-largest economy, trade promotion officials say.

According to a recent report issued by the China Council for the Promotion of International Trade, among 400 foreign companies it polled in the second quarter operating in China, the number that plan to increase investment by 20 per cent rose 6.73 percentage points over the first quarter. Meanwhile, 15 per cent of them said they plan to increase their investment in China this year.

Nearly half of the companies expect their profit margins to increase in the next five years, with businesses from the United States being the most optimistic ones about future operations in China.

Over 40 per cent of the polled US companies believe the potential for the Chinese market’s growth this year is good and its attractiveness is on the rise, according to the report.

Among the surveyed companies, 43 per cent were from developed economies, such as the US and Europe.

Despite the constantly changing international situation, the world’s second-largest economy remains a widely acknowledged investment hot spot, CCPIT said.

“Foreign enterprises were overall satisfied with China’s business environment during the survey period. They said they remain bullish on the Chinese market and their confidence in expanding investment in the country has been growing,” Wang Linjie, a spokeswoman for the CCPIT, said during a news conference in Beijing.

Facing downward pressure in the global economy, China’s economy showed its resilience and the country’s 1.4 billion population constitutes a super large-scale market, which is attractive to foreign companies, said Fu Yifu, a researcher at the Star Atlas Institute of Finance.

“China has been ramping up efforts to promote high-standard opening-up to the world and optimising its business environment to attract more MNCs in the past few years,” Fu said.

“For foreign companies, investing in China can help them share the dividends of China’s economic growth and achieve better business growth.”

European aircraft manufacturer Airbus said it is bullish on the business environment in China — its largest single-country market — and it is committed to investing in this thriving market for the long term.

The company delivered its 700th A320 family aircraft assembled at its final assembly line in Tianjin in July. The Tianjin facility serves as its first assembly line outside Europe and has been in operation for more than 15 years.

“The aircraft delivered from Tianjin is a microcosm of the cooperation between Airbus and the Chinese aviation industry. Airbus remains dedicated to strengthening its collaboration with China,” said George Xu, Airbus executive vice-president and Airbus China CEO.

Meanwhile, US aircraft maker Boeing Co said that driven by economic growth well above the global average and increasing demand for domestic air travel, China will need 8,560 new aircraft in the next 20 years, accounting for one-fifth of the world’s airplane deliveries. China’s domestic aviation market will also become the largest globally by the end of the forecast period.

French luxury jewellery brand Van Cleef & Arpels also said that China, as one of its three largest markets, is a key one for the company and it will continue to open more boutiques in the country.

In China, there are well-off and sophisticated consumers in every part of the country, and they are younger than consumers in some developed markets, said Laura Lai, managing director of Van Cleef & Arpels China.