Xinhua News Agency, Beijing, Feb. 11 (Xinhua) -- Why is the Chinese market "inseparable" and "reluctant"?
Xinhua News Agency reporter
At the end of the year and the beginning of the year, many multinational companies have successively released financial reports announcing their performance in the Chinese market, affirming the important position of the Chinese market in their global business map. At the same time, certain Western institutions and media outlets have frequently spurred the praises of China's economy, and even encouraged multinational companies to "leave with their profits". This is a huge "temperature difference" with the business activities and actual feelings of multinational enterprises in China.
Is it profitable to do business in China? Do most multinational companies plan to take profits or continue to work hard? Why does the international business community oppose "decoupling"? With these questions in mind, let's find out.
At the foot of Maoshan Mountain, the night of Jintan Oriental Salt Lake City in Changzhou, Jiangsu Province (taken on December 22, 2023, drone photo). Photo by Xinhua News Agency reporter Ji Chunpeng
Don't give up market opportunities
"China is not only a key market, but also an important fertile ground for talent and innovation, which is critical to the global competitiveness of U.S. companies. Tamson Tansen, chairman of the American Chamber of Commerce in China, said in a report recently released by the agency. According to the report, in 2024, about half of the surveyed companies will maintain the same scale of investment in China, and nearly 40% plan to increase capital in China.
Judging from this report, American companies in China do not believe the claims of some Western media that question China's economic growth potential. Xinhua News Agency reporters interviewed and learned that last year, many American companies such as Honeywell and Corning made positive progress in a number of Chinese businesses.
Recently released financial reports show that multinational companies are optimistic about the Chinese market on a solid basis, and China's attractiveness as an investment destination has not changed. In fiscal year 2023, L'Oréal and Bosch Group's sales in China will both increase by more than 5%, and Apple's revenue in Greater China will account for about one-fifth of the company's total revenue. Starbucks also achieved good growth in the first quarter of fiscal 2024, adding 169 net new stores in Chinese mainland.
Tourists play on the central street of the century-old street in Harbin on January 9, 2024 (drone photo). Photo by Xinhua News Agency reporter Zhang Tao
Yum China, which owns well-known restaurant brands such as KFC and Pizza Hut, recently announced that the company's total revenue increased by 15% last year over the previous year, and the net new stores were 1,697, exceeding the annual net new store target. Yum China's Chief Executive Officer, Qu Cuirong, said that the company is very optimistic about the vast growth opportunities in the Chinese market, and will continue to expand its target markets in the future to meet the needs of these regions brought about by the long-term consumption upgrade, and deeply rooted in China.
Procter & Gamble's chairman and chief executive officer, Mr. James said on the earnings conference call that his recent visit to China and his experience of meeting with local employees and consumers made him believe that there is an opportunity for the company to continue to expand its business in China in the coming years.
Sergi Basco, a Spanish economist and associate professor of economics at the University of Barcelona, said that China, as a market with ample domestic demand, is a huge attraction for European companies. As domestic demand expands due to increased consumption, more foreign companies will enter the Chinese market.
"Like a fish drinking water, it knows its own warmth and coldness. "While certain Western institutions and media are racking their brains to smear China's economy, the global business community is converging on China, busy creating cooperation opportunities and capturing market opportunities.
A robotic arm performs welding operations at Li Auto's Changzhou base in Changzhou, Jiangsu Province, on January 10, 2024. Photo by Xinhua News Agency reporter Ji Chunpeng
Reluctance to grow opportunities
"China is not only an important market for the Bosch Group, but also an innovation and R&D base. Xu Daquan, President of Bosch China, recently told Xinhua News Agency that the intelligent mobility business is the main growth driver of the Bosch Group's business in China. With nearly 58,000 employees in China, the Bosch Group has maintained steady growth. The Fortune 500 company said it will continue to invest in China to enhance its manufacturing and R&D capabilities.
For multinational companies, China has a superior innovation environment and talent pool. In addition, the continuous iteration of business application scenarios, the developed digital economy and the active market competition have brought unique growth opportunities to multinational companies.
In McDonald's China's restaurant warehouse, staff only need to wave the mobile terminal in their hands, scan the electronic tag of the goods packaging, complete the inventory work, and transmit data in real time through cloud computing and data engine.
McDonald's China CEO Zhang Jiayin told Xinhua News Agency that McDonald's China is currently leading the McDonald's global market in new store development, digital transformation and delivery business. This is due to the digital transformation of enterprises to embrace China's business model.
This is a hydrogen-powered subway construction operation vehicle developed by China Railway Wuhan Electrification Bureau taken on July 18, 2023. Photo by Xinhua News Agency reporter Xiao Yijiu
In recent years, China has continued to promote green and low-carbon transformation and vigorously develop new energy industries. The rapid growth of the export scale of foreign trade products such as electric manned vehicles, lithium-ion batteries and solar batteries provides growth opportunities for many multinational companies based on innovation and competition.
Tetsuro Honma, global vice president of Panasonic Holding Group, said that while China maintains its status as a manufacturing power, it is gradually becoming a big consumer and a big innovation country. The fiercely competitive Chinese market has become an ideal training ground for sharpening the competitiveness of foreign-funded enterprises. This kind of competition brings growth opportunities that no company is willing to give up.
In 2023, the Volkswagen Group will locate its largest R&D center outside the German headquarters in Hefei. Volkswagen Group China's Chairman and CEO Bratt said that Volkswagen is fully integrating into China's industrial ecosystem. In a dynamic market environment, rapid development is the key to maintaining competitiveness.
McKinsey China Chairman Ni Yili told reporters that in terms of market size, consumption capacity and innovation potential, there are almost no other regions in the world that can replace the Chinese market. For companies, the Chinese market can inspire the consumer sector and become an innovation base for them.
This is a photo taken on February 7, 2024 at the Jingtang Port Container Terminal in Tangshan Port (drone photo). Photo by Xinhua News Agency reporter Yang Shiyao
Don't give up the supply chain advantage
China is the only country with all the industrial categories in the United Nations Industrial Classification, with a super-large market and a stage of rapid demand release, and its strong supply chain advantages make it impossible for many multinational companies to give up.
"The Chinese market is difficult to replace. The McKinsey Global Institute of the United States pointed out in a recent report that although the current restrictions on global trade have increased, China's advantages in the global supply chain cannot be truly replaced.
In the supply chain of Apple in the United States, China is one of its important production bases. At the first China International Supply Chain Promotion Expo held last November, Apple wrote on a booth display board: "151 of Apple's 200 major suppliers are produced in China. ”
This slogan reveals China's pivotal position in the global supply chain, and also shows that the cost of "decoupling" from China is really "unbearable" for companies.
On December 22, 2023, at Tesla's Shanghai Gigafactory, workers inspect the paint, doors and windows of vehicles before leaving the factory. Photo by Xinhua News Agency reporter Fang Zhe
For Tesla, the American electric car manufacturer, the Shanghai Gigafactory has become its global export center, ranking among the top in its industry in terms of efficiency. Also located in Shanghai, Tesla's first energy storage gigafactory project outside the United States is also scheduled to start production this year.
"Tesla's Shanghai Gigafactory can achieve such high efficiency, which is inseparable from the deep integration of the company's supply chain with China. Tao Lin, vice president of Tesla, said.
A number of experts from the Deutsche Bundesbank recently wrote that in the long run, leaving China will bring significant commercial and economic costs to German companies. German companies will miss out on China as a "major sales market", and many supply chains will have to be restructured at the expense of efficiency. (Participating reporters: Ma Zegang, Deng Qian, Xu Jiatong, Wang Jiawei, Liu Chunyan, Zhong Ya, Chen Binjie, Kang Yi, Chen Wenxian, Wu Xiaoling, Du Juan, Xu Feng, Hu Zunyuan, Shan Weiyi, Xie Yuzhi)