Multinational corporations seek fresh growth points in China
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In China, Covestro AG, a German chemicals manufacturer, is setting up a new plant in Zhuhai, Guangdong province; Schneider Electric SE, a French industrial conglomerate, will build an industrial park in Xiamen, Fujian province; and Bridgestone Corp, a Japanese tyre company, has announced it will invest 562 million yuan (£61.1 million) in China over the next three years.
These seemingly unconnected corporate developments have one thing in common: they represent a trend of multinational corporations seeking fresh growth points in China’s green transformation and rapid development of its high-end manufacturing sector.
Against the backdrop of global economic uncertainties, the idea of ensuring secure and sustainable investments has gained traction worldwide. MNCs, particularly those dealing in high-end materials, industrial parts and components, and green-related industries, are prioritising long-term returns.
To this end, they are establishing more innovation centres and advanced factories in China to sustain competitiveness while navigating future challenges.
For example, Marelli Holdings Co Ltd, an Italian-Japanese mobility product supplier to the automotive industry, will expand its engineering team in China from 800 to 1,000 soon to meet surging demand for innovation.
David Slump, the group’s president and CEO, said Marelli will ride China’s electric vehicle wave by supplying products ranging from automotive lighting and electronics to software solutions to its partners in the country.
Dismissing the “China overcapacity” narrative, especially in the areas of new energy industries, Slump said that China, recognised globally as a major EV market and home to some of the world’s leading EV manufacturers, will create substantial opportunities for global companies aiming to sustain robust growth in this burgeoning sector.
Markus Steilemann, CEO of Covestro, said he opposes the “China has overcapacity” narrative and is not a fan of excessive regulations, especially in markets where free trade is essential.
Excessively prohibitive measures and restrictions may not effectively boost productivity, and criticising perceived overcapacity is not the right way to global cooperation, said Steilemann, adding that about 75 per cent of Covestro’s planned investment in the Asia-Pacific region will be in China over the next three years.
Without revealing the specific investment figure, the German executive said that Covestro is currently building a plant to make thermoplastic polyurethanes in Zhuhai, with an annual production capacity of 120,000 metric tonnes by 2033.
Pan Yuanyuan, an associate researcher at the Chinese Academy of Social Sciences’ Institute of World Economics and Politics, said China’s abundance of innovative application scenarios, supported by favourable policies and a flourishing market, will remain attractive for global investors.
“There will persist enticing investment opportunities, especially within emerging industries and innovative business formats,” said Pan.
Latest data from the Ministry of Commerce show China’s high-tech manufacturing sector attracted 12.7 per cent of the foreign direct investment inflows into China in the first four months of this year, up 2.7 percentage points year-on-year.
Following China’s announcement that it has lifted all restrictions on foreign investment in the manufacturing sector and implemented measures to ensure equal treatment for foreign-funded companies, the number of newly established foreign-invested firms in China reached 16,805 in the first four months of this year, up 19.2 per cent year-on-year.
Jin Zhuanglong, minister of industry and information technology, said that efforts will be intensified to support foreign businesses in establishing R&D centres in China.
Moreover, collaboration with Chinese companies for technological research, industrial applications and expanding international cooperation in digital transformation, as well as green and low-carbon development of the manufacturing sector, will be prioritised, he said.
These policy measures will create favourable conditions for overseas businesses to participate in the development of China’s new quality productive forces, said Zhu Bing, director-general of the Department of Foreign Investment Administration in the Ministry of Commerce.
Highlighting that the concept of new quality productive forces is fully in line with Schneider Electric’s growth strategy, Yin Zheng, its executive vice-president of China and East Asia operations, said the company will strengthen its “China Hub” strategy this year in all aspects, including talent, innovation, supply chains and ecosystem development.