Foreign firms bullish about economy
Updated: 2012-05-07 07:49
By He Wei in Shanghai (China Daily)
GM has set aside $1 billion to $1.5 billion to support its China business, and will focus on renovating its current plants. For instance, the company just opened an extension to its plant in Qingdao and is extending another plant in Yantai.
"We will not consider major moves such as mergers and acquisitions any time soon," he said.
Jeff Kirwan, managing director of clothing retailer Gap Inc, said although the company is fairly new to the country, he still sees chances to do well.
Kirwan told China Daily that Gap plans to have 30 more stores, up from the current 15, and its presence will reach 10 cities by the 2012 fiscal year. Besides, China will be its largest growth vehicle in terms of both sales and investment.
"China is a competitive market and is becoming more so as more international retailers enter the marketplace. I foresee multiple brands coming under one company over the next five years," he said.
The downward adjustment of China's GDP growth target has failed to deter multinational corporations, as many see the opportunities to turn the current government goal to their advantage.
"From China's 12th Five-Year Plan, we see a clear strategic switch for China to be more focused on the quality of growth instead of speed. We think that is a right direction. In fact, we see more opportunities in that direction, especially in the fields of improved living standards, innovation of new materials and biotechnology," said Jiang Weiming, DSM's China president.
Headquartered in the Netherlands, the specialty chemical company has in the past five years aggressively entered life sciences, particularly food nutrition, which witnessed a 10-fold jump in sales.
DSM has developed vitamin and mineral mixtures to meet the needs of Chinese children suffering from anemia. Its net sales in China increased 30 percent year-on-year to $2 billion in 2011.
Jiang said DSM will continue its strong focus on China and expects to more than double its China sales to more than $3 billion by 2015, supported by planned investment of $1 billion.
But it will shift from "an intensive portfolio to maximizing sustainable and profitable growth, with concentrated efforts to meet high-end demands for health and nutrition in China", Jiang said.
Only 8.5 percent of surveyed US companies in the AmCham survey are set to build new offices in China in 2012, whereas the majority would "evaluate" the pros and cons before making such a move.
This is a trend which will be sustained over the next decade or so, said Butler. Companies need to make the necessary investments to sustain their presence and competition over time.
According to Dan Steinbock, research director of international business at the India, China and America Institute in the US, it is only reasonable for European and US companies to shift from "going for presence" to "going for quality".
"When foreign companies established their operations in the mainland, China was still a low-cost nation. Now several regions are moving toward innovation-based competition and, over time, relatively poorer cities and provinces will follow. If foreign companies want to compete successfully in China's rapidly changing environment, they cannot remain complacent."