Multinationals Are Still Optimistic About the Chinese Market in the Post-pandemic Era

By Zhang Yan

Multinational corporations have long played a vital role in China？s economic development， and China？s vast market and increasing open business environment have also provided opportunities for the development of multinational corporations. At a roundtable seminar on “MNCs and China in Post-Pandemic Times” recently held by the Center for China & Globalization （CCG）， multinational companies that have been operating in China for many years talked about how to strengthen local cooperation and the development potential of the Chinese market.

Foreign investment hit a new high

Data from the Ministry of Commerce showed that China attracted a record amount of foreign investment in 2021. The actually utilized foreign investment of the whole year exceeded for the first time， reaching RMB 1.1 trillion， up 14.9%. 48，000 new foreign-funded enterprises were established， up 23.5%. Both the scale and quality of foreign investment were improved.

According to the quarterly reports or annual reports released by major multinational companies in the first quarter of 2021， Starbucks， Skechers and BMW all saw a decline in their global business， but their business in China showed significant growth with varying degrees. Skechers？ total retail sales in China grew by 11% year-on-year in 2020， while BMW？s cumulative new vehicle deliveries in China increased by 7.4% year-on-year. In the first quarter of the fiscal year 2021， Apple reported a 57% year-on-year increase in revenue in Greater China.

By 2019， more than one million foreigninvested enterprises had been set up in China. Transnational enterprises have played an important role in China？s industrial upgrading， technological progress， economic growth， fiscal and tax revenue， social employment expansion and talent training.

China is still the world？s largest TOEFL market and the second largest GRE market， said Wang Mengyan， President of ETS China. ETS has been in China for 40 years and has experienced lots of challenges and opportunities. In 2021， many changes took place in China？s education industry. On the one hand， due to the impact of COVID-19， many students gave up studying abroad and chose to study locally. On the other hand， the government has introduced the “Dual Carbon Goals”， which has a certain impact on the subject of English education. “But at the same time， we see the Chinese government still encouraging openness in education and the need for international talent. Therefore， service providers can help these Chinese students not only to study abroad， but also to form a bridge for Chinese students to become international talent. Besides Beijing， Shanghai， Guangzhou and Shenzhen， cities like Hainan， Sanya are becoming more and more international， so setting up international schools and training international talent in these places is also a big opportunity，”Wang Mengyan said.

Liu Chang， Vice President of Knorr China， said， “we have witnessed and promoted the rapid development of China？s real economy over the past 40 years， and also seen the process of China？s opening up. We have also benefited greatly from this development. How to maintain a win-win situation between China and multinational companies in China， I think is not a one-way street， but joint efforts in many aspects.” She noted that multinational companies used to see China as a market， production base or part of the value chain， but now treat it more as a strategic partner and actively embrace changes in China.

“Based on the data and facts we collected， we found that localization by multinational companies is actually beneficial for both their own performance and the global value chain， and for local development. Therefore， multinational companies will continue to seize opportunities and then promote transformation， and we still have to serve as a bridge. We look forward to continued improvements in China’s business environment that will give multinationals greater confidence and security to remain rooted in China and expand our investment in China，” Liu Chang points out.

Choose to continue investing in China

Steve Lynch， President of the China-Britain Chamber of Commerce， said that many multinational companies chose to invest in China because they are optimistic about the market. “82% of the companies we interviewed respond that they regard the opportunities in China are very good，”he said. Foreign investment in China is expected to remain high in 2022 as China is highly attractive to foreign investment， according to a KPMG survey report. According to a HSBC survey of more than 2，000 foreign companies， over 90% of the companies surveyed said they would continue to expand their investment in China.

Agnes Cui， Vice President of IBM Chinese government affairs， is optimistic about China？s future development prospects， “we have run business in China for a long time and we’re a technology leader in some areas. We also hope to develop China as an international market. With this aim， we provide advanced new technology and cultivate talent， which may better create innovative enterprises.” At the same time， Agnes said that many Chinese companies want to enter the overseas market and may cooperate with multinational companies to achieve win-win results.

Martin Muller， Chairman of the Swiss Chamber of Commerce in China， pointed out that those who have not really experienced China？s development have limited access to information to better understand the country. This requires the business community and society to raise China’s voice and tell China’s story abroad.

“We need to create a better external connection so that the world may understand China through publications. We want to let the outside world hear these true stories of China. At the same time， we have spent the last four to eight years gathering and communicating real information to make people believe that this is China，”Muller points out.

According to a research report released by the American Chamber of Commerce in China， the American Chamber of Commerce in Shanghai and PwC， the China-US trade dispute affects the supply chain of 90% of the US companies， especially in terms of supply base selection， risk management and cost control.

US-China Business Council representative Matthew Margulies noted that challenges remain between the US and China. But as US-China Business Council President Craig Allen said， trade and investment in China are important to American families and workers， and there？s a lot of evidence that healthy business relationships enable companies to innovate both inside and outside China. At present， China is the third largest export market of the US， and the two countries maintain winwin investment and trade. He believes the USChina relationship is very important and hopes that business people will find opportunities to work with China and build partnerships to develop these two markets.

Optimistic about the potential of green？low-carbon and digital industries

The Ministry of Commerce said in a press conference that it will continue to revise and expand the Catalogue of Industries to Encourage Foreign Investment， give full play to the effects of preferential policies such as land and taxation， and guide foreign investment to invest more in domains such as advanced manufacturing， modern services， high technology， green and low-carbon and digital economy. Continued efforts will be made to improve the business environment. China will step up efforts to protect the legitimate rights and interests of foreign investors and ensure that foreigninvested enterprises receive national treatment. China will strive to create a better business environment and make here a hot destination for foreign investment.

“I believe opportunities still exist， especially as China begins to shift the focus of governance from growth to balanced growth and sustainability，” said Leng Yan， Executive Vice-President of Daimler Greater China. “Mercedes-Benz has developed together with China and we believe that China still has great potential for development. It is not surprising that in 2021， despite COVID-19 and other major challenges， China achieved an average GDP growth rate of 8.1%， maintained its position as the most important premium car market in the world， and the development of new energy market is particularly fast.” Leng said that this is closely related to China’s concept of highquality development and its dual carbon goals. It is introduced that Mercedes-Benz has begun to take a holistic approach to reducing carbon emissions across the entire value chain of vehicles from technology development， production， maintenance services and recycling.

“Compared with other markets， Chinese customers are more willing to accept new technologies. More than 80% of Chinese customers believe in driverless cars， and we expect to see more driverless cars and connected vehicles in China，” Leng Yan added.

As China enters the 14th Five-Year Plan stage， many multinational enterprises see huge business opportunities and development potential. “As China enters the 14th Five-Year Plan stage， every Five-year Plan in China has the opportunity to take off，” said Feng Bowen， Global Chairman of KPMG？s Global China Business Development Centre. Feng pointed out that multinational companies are supposed to be involved in the process of innovation in China. In this process， new business models and new technologies emerge one after another. Enterprises should take advantage of cost advantages to better seize the opportunities of this transformation. Foreign investment will continue to play its role in China， whether in technology R&D， consumer demand and innovation development. He also hopes that Chinese authorities will continue to introduce incentives to push multinationals to play their part in the value chain.

Feng Bowen regards there are business opportunities in five domains. “The Belt and Road Initiative allows us to collaborate on projects in various aspects， including digitalization and greening，” Feng said. Both the real economy and the traditional economy can be transformed and upgraded through technology. In China’s transition to a green and lowcarbon economy， there are opportunities for growth in related finance， consulting and public services， like education and healthcare. In the meantime， the insurance， banking， securities and other sectors can strengthen supervision to make good use of capital.

Guo Tao， Global Vice President of Qualcomm， said that as China has begun its 14th FiveYear Plan， multinationals can take advantage of digitalization to promote new businesses， such as ecommerce， online medical care and the application of new technologies such as AI. Qualcomm will focus on the Chinese market and find better partners to better meet the growing needs of Chinese partners， such as R&D and application of new technologies. He said Qualcomm is willing to cooperate with Chinese partners to better stimulate ecological development.

Roberta Lipson， Founder and Chief Executive of United Family Healthcare， said business and service opportunities are emerging as China’s demographics keep changing. At the same time， local governments are encouraging the implementation of the three-child policy and have introduced relevant preferential measures and services， providing great opportunities for the medical， drug and insurance industries. For example， as China is gradually entering an ageing society， multinational medical enterprises can provide long-term care for the ageing population， manage the treatment of chronic diseases， provide better services for women of childbearing age， and provide medicine services online.