Go-to destination for foreign investors
New policies set to bring more capital, tech, talent and manufacturing capacities to China
Global life sciences company Cytiva is expanding its Fast Trak center in Shanghai with an investment of around $8 million to tap China’s rapidly growing biopharma industry.
Yu Lihua, general manager of Cytiva China, the local unit, said the company hopes to introduce advanced technologies in China and further its integration into the country’s supply chains that are characterized by strong resilience and flexibility.
Cytiva’s China strategy is a testament to the trend of an increasing number of foreign companies funneling more and more resources into the country. It is a trend that is increasing China’s weight in foreign companies’ global industrial and supply systems.
Just how important China has become to foreign companies can be gauged from Cytiva’s upgraded Fast Trak center, which covers 11,000 square meters and will offer high-end manufacturing services to its customers. This is expected to accelerate the standardization, digitalization and scalable development of the biopharma industry, which makes medicines using biological sources like yeast and bacteria.
Cytiva has also launched a series of new solutions to meet market demand for process design and manufacturing in China, while forging new partnerships with local enterprises such as OriCell Therapeutics and Foster Bio.
A report submitted to the opening session of the 20th National Congress of the Communist Party of China said the country will quicken efforts to foster a new pattern of development with focus on both the domestic economy and positive interplay between domestic and international economic flows.
China will raise total factor productivity, and make industrial and supply chains more resilient and secure, the report stated.
The industrial landscape will be modernized, with measures underway to advance new industrialization, which will boost China’s strength in manufacturing, product quality, aerospace, transportation, cyberspace and digital development, the report said.
Experts said foreign investors are integrating deeper into China’s complete industrial chain and resilient supply chain, against a backdrop of growing uncertainties and complexities in the global economy.
China’s prominence in global industrial and supply chains will continue to grow, as the country advances high-level development and opens up still wider to the rest of the world to remain increasingly attractive to foreign investors, they said.
China has recently adopted a series of new moves to better attract foreign investment, which include revising the catalog of industries for encouraging foreign investment and rolling out 15 new measures to promote foreign investment in the manufacturing sector.
“Recent data have again showed foreign investors are investing more in China,” said Wei Jianguo, vicechairman of the China Center for International Economic Exchanges.
He predicted capital, technologies, manufacturing capacities and talent will all flow into China at an accelerated pace, especially as the global industrial and supply chains are crimped due to factors like geopolitical conflicts.
According to the Ministry of Commerce, the actual use of foreign capital in the Chinese mainland expanded 14.4 percent yearon-year to 1.09 trillion yuan ($152 billion) during the first 10 months of the year.
The country not only has a huge and growing consumer market, but also provides the best mix of advanced manufacturing infrastructure, efficient logistics and high-quality skilled workers, said a report released in May by the Chief Investment Office of Switzerlandbased investment bank UBS.
German agricultural and healthcare group Bayer AG said it has always been active in expanding local networks and partnerships, and strengthening its strategic collaborations with local industry partners to establish deeper and more lasting roots in China.
Over the years, the company has established a powerful local cooperation network encompassing research and development, production, sales, services, and public education.
During the recently concluded fifth China International Import Expo, the company signed some agreements and also launched some products. It established partnerships with new allies and renewed cooperation with old ones.
Among that was an investment agreement between Bayer Crop Science and Qiantang district of Hangzhou in Zhejiang province, where a new supply center will be built.
With an investment of more than 300 million yuan, the new supply center is planned to be operational by 2025. It will further meet the demand for innovative, efficient and green crop protection products in China and across the Asia-Pacific region.
According to Zhang Wei, vicepresident of the Chinese Academy of International Trade and Economic Cooperation, industries like hightech, modern services and environmental protection in China will likely create more development opportunities for foreign investors, as they have been prioritized in the country’s development strategies.
On the other hand, foreign investment can play a better role in China’s technological advancement and green and low-carbon development, she said.
Recent data from the Ministry of Commerce have showed pickup in FDI flowing into high-tech industries. Foreign investors are eager to tap opportunities arising from China’s accelerated implementation of its innovation-driven development strategy.
In the January-October period, FDI rose nearly 32 percent year-onyear. Foreign investment in hightech manufacturing rose 57.2 percent, while it surged 25 percent in the high-tech services sector.
Such surges are attributable to companies such as Japanese industrial automation giant Omron.
By hiring more than 8,800 employees in China, Omron has reinforced its confidence in the country’s future prospects. Outside of Japan, Omron now has the largest number of employees in China.
The company is building a new healthcare product R&D and production center in Dalian, Liaoning province. The new facility is expected to be completed in 2023, with a total investment of 320 million yuan.
The company has established five regional headquarters in China to build a highly efficient corporate operation network, with the latest one set up in Dalian in October last year. The others are in Beijing, Shanghai, Shenzhen in Guangdong province and Hong Kong.
“In China, Omron will combine the corporate strategies with China’s status as a world manufacturing powerhouse, a populous country and a large agricultural country,” said Xu Jian, president and CEO of Omron China Co Ltd.
“We will focus on developing and introducing cross-field applications of technologies like remote sensing and big data to promote intelligent and digital technologies and solutions, and therefore better meet demand from the digital transformation of the manufacturing and healthcare sectors and the modernization of agriculture in China,” she said.
Merck China Healthcare also said China already ranks among the first-tier countries for its global new drug clinical development and market registration plans, as the Chinese government ramps up efforts to encourage innovation.
“China has a key position in our global network to develop innovative drugs and provide innovative healthcare solutions to more patients,” said Vivian Zhang, general manager of Merck China Healthcare.
The company’s continuous investment in China makes it highly integrated with China’s local industrial and supply chains, she said, adding Merck is currently developing new healthcare solutions and innovative payment methods with local partners for chronic disease management.
Experts also said that although local labor costs have increased, China still has relatively strong competitiveness in labor-intensive industries, thanks to its low combined cost of production factors, complete industrial chains and improving business environment.
According to the UBS report, while labor-intensive sectors like footwear have been relocating to other markets in the neighboring regions, especially Southeast Asian countries, in the past decade, China remained the world’s largest shoemaking country in 2021.
When it comes to the midstream of the production chain and intermediate goods, China is irreplaceable with its comprehensive and large-scale manufacturing chain, the report said.
Jeff Ma, executive vice-president of the Greater China and Asia New Markets at The Woolmark Company, said China is one of the company’s most important markets in global trade and supply chain.
“With Chinese companies’ ongoing evolution and developments in technology and innovation, and given Chinese fashion brands’ and designers’ sustained impressive performance on the international stage, we believe that China has the potential to become the leading powerhouse for the world’s wool fashion,” he said.
The company has established a number of wool R&D units and education centers with Chinese enterprises and institutions.
Three Chinese wool textile manufacturers — Jiangsu Sunshine Group, Shandong Nanshan Fashion Sci-Tech Co Ltd and Shandong Ruyi Technology Group Co Ltd — have been awarded the Woolmark Gold certification this year, in recognition of their outstanding contributions in the field of worsted wool fabric production. Only well-known British and Italian companies have won the honor before, Ma said.