Foreign investment switches to advanced manufacturing and services
Foreign companies, instead of investing in traditional manufacturing industries, such asmachinery, steel and automobiles, as they used to, are now concentrating on China's advancedmanufacturing and service sectors.
Denis Depoux, vice-president of Roland Berger Strategy Consultants for Asia, said China'sgrowth will be less capital-intensive and investment-driven, which also means that governmentdecision-makers will increasingly evaluate projects based on their economic, environmental andoperational efficiency.
"Overall, the modernization of the Chinese industrial base will gradually improve the ability forforeign companies to market high value-added products and services in China while creatingnew competition," said Depoux.
Last month, Germany's Siemens AG opened its first innovation center for intelligentmanufacturing in Qingdao, Shandong province, to enhance innovation in the fields of robotics,modern logistics, big data, information security and smart cities.
Zhu Xiaoxun, head of Siemens Corporate Technology China, said the center will bring advanceddigitalization and automation technologies to China's manufacturing industry and createinnovation platforms that integrate both the virtual and real worlds and transform concepts intosolutions with partners in China.
"China's surging wealth and ongoing urbanization process have put traditional labor-intensiveindustries under huge pressure in terms of technological upgrading, recruitment and highemployee turnover," he said.
Siemens will increase investment in research and development by 300 million euros ($332million) to a total of 4.8 billion euros globally this year, and will deploy more resources andtechnologies in the Pearl River Delta region in Guangdong province, one of China's traditionalmanufacturing bases.
Its expansion plan will include building a rail equipment manufacturing base in Jiangmen, as wellas introducing more advanced factory equipment and traffic control systems, green buildingconstruction and management processes, and smart grid and electric vehicle manufacturingequipment at its facilities in the Hengqin New Area of Zhuhai.
Eager to grab more market share, US aircraft maker Boeing Co plans to build a completioncenter for the B737 in China after breaking a record in the Chinese market in 2015with thedelivery of 200 aircraft, which accounted for 55 percent of the market's new aircraft deliveries forthe year.
Airbus, Boeing's major rival, delivered 160 aircraft to China last year, the sixth year in a row theEuropean aircraft maker's deliveries to China exceeded 100. The company operates its onlyaircraft final assembly line outside Europe in Tianjin, a port city in North China.
With the service sector accounting for 50.5 percent of China's GDP in 2015, it has also becomea hot destination for foreign investment over the past five years.
Home Credit Group, a consumer finance provider from the Czech Republic that entered China in2007, now has registered capital of 3.3 billion yuan ($507 million) in the country. It has apresence in more than 260 cities in 24 provinces and municipalities, and last year had more than33,000 employees in China.
"I have full confidence in the Chinese economy. Compared with the rest of the world, for example,Europe, China has achieved significant economic growth," said Jiri Smejc, chairman and CEOof Home Credit.
"China's economy is restructuring from one driven by investment to one that is driven byconsumption," said Smejc.
The company will increase the number of products available for loans and accelerate thedevelopment of its online business in China to further diversify its operations this year.
