Published: 11:17, October 18, 2022 | Updated: 11:21, October 18, 2022
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Global manufacturers banking on China market
By China Daily

Editor's Note: The ongoing 20th National Congress of the Communist Party of China is widely expected to start a new chapter in the saga of reform and opening-up that energized the Chinese economy over the last four decades and made it the world's second-largest. It also sets the tone for improving the business environment for global firms, big and small, operating in the country. China Daily publishes a series of Q&As with business executives from leading MNCs featuring their outlook for the Chinese economy as well as their hopes for the future prospects of their businesses in China.

From left: Henry Ding senior vice-president of 3M and president of 3M China; Lars Eckerlein general manager of ABB (China) Ltd; Samson Khaou executive vice-president of Dassault Systemes Asia-Pacific; Gao Yan member of executive committee of Thyssenkrupp AG and CEO of Thyssenkrupp China; Guo Qing managing director of Embraer China. (PHOTO PROVIDED TO CHINA DAILY)

Q1 Against the backdrop of a much-troubled global economy, how will China's economy likely perform going forward, given that it has already made immense contributions to the tasks of stabilizing both the global supply chain and the world economy?

DING: Despite short-term headwinds or challenges, we believe the fundamentals of a resilient, high-potential and prosperous economy in China remain intact.

China is a strategically important long-term market for 3M. We started our business in China in 1984 as the first wholly owned foreign enterprise, and have built out tremendous teams and capabilities. Shanghai, for example, is home to one of 3M's four global research centers, and we have nine manufacturing sites across the country.

I am proud of our 8,000 employees in China who apply 3M science to improve lives — including battling COVID-19. We believe we will continue to find great opportunities in this market.

ECKERLEIN: The Chinese economy has shown its strength and resilience amid multiple challenges and has made a sustained contribution to the world economy.

China is ABB's second-largest market worldwide, representing 17 percent of 2021 group revenue. We see many new opportunities in such areas as e-mobility, digitalization, the industrial internet, artificial intelligence and sustainable development.

As a long-term partner of China, ABB is committed to supporting China's digital upgrade and green transformation through close cooperation with our customers and partners in China.

KHAOU: Dassault Systemes has witnessed the resilience and efficiency that China has developed in the manufacturing and infrastructure sectors. We expect that China will further drive the digital transformation of the industrial chain and contribute to facilitating global economic recovery.

GAO: With the world's second-largest GDP, China plays a crucial role in stabilizing and developing the global economy, especially in terms of industrial and supply chains. In the face of challenges such as the COVID-19 pandemic and slowing economic growth, the Chinese government has taken timely and effective intervention to strive for economic recovery and stimulate infrastructure investment.

These efforts have also brought a positive impact on stabilizing the global economy, which can be seen from China's strong export figures over the past two years since the COVID-19 pandemic outbreak. We expect China to do more in the complex international situation to maintain healthy growth.

GUO: Despite pressure from resurgences of local COVID-19 cases and a complicated and grim international environment, China's economic fundamentals remain solid, and there are sufficient policy measures to ensure stable growth.

We are optimistic that these measures taken by the Chinese authorities will lead to a revival of growth. As the world's second-largest economy, China has a huge impact on the rest of the world in terms of medium and long-term economic development.

We believe that over the longer term, China will continue to be a major growth driver for the global economy.

Q2 China has been deepening its reform and opening-up policy, particularly at the institutional level, so as to ensure equal treatment and an optimized business environment for foreign companies operating in China, and to persuade more of them to invest in China and benefit from the country's thrust on tech and innovation. How do you view China's efforts? How can China intensify such efforts, particularly in the context of any potential external or internal barriers?

DING: The business environment for foreign enterprises has steadily improved in China. This includes significant progress on IP protection, which will facilitate market access for many products. We are encouraged that China's approach to foreign investment remains positive, and we look forward to continuing to be a part of China's even more open market.

Last year, we expanded production capacity of structural adhesives at our factory in Jinshan, and set up a semiconductor grinding disc production line at our Suzhou plant. This year, we will further invest in China and achieve localizations for projects in the electronics, automotive, safety and protection fields.

ECKERLEIN: China is committed to continuing its path of economic reforms, and has introduced a series of policies in recent years aimed at further improving the business environment for local and international companies.

ABB has been a participant, witness and beneficiary of China's economic reforms. After decades of significant progress, ABB has established a full range of business activities in China, including R&D, manufacturing, sales and service focusing on electrification and automation, with 27 local companies and 15,000 employees across China. To date, ABB has invested 19 billion yuan ($2.64 billion) in China.

KHAOU: China's business environment continues to improve. Markets are opening, regulation is becoming fairer and more equitable, and services for enterprises are also improving. China has introduced many policies to support foreign investment, ensure fair market competition and encourage foreign companies to stay and develop in China.

We adhere to the concept of "In China, For China, With China" for our sustainable development in the country.

GAO: We have witnessed China's great efforts in attracting foreign investment, such as shortening the negative list, further opening up the field of foreign investment access, reforming government functions, and reducing administrative burdens in recent years.

We appreciate that the Chinese government has attached great importance to the development of foreign companies.

GUO: As a key player in the industry, Embraer appreciates the optimized business environment and rich opportunities provided for regional aviation.

The air transport sector makes a major contribution to the economy of China, but the commercial airline industry suffered immensely due to the impact of the pandemic. With opportunities and challenges coexisting, we hope to see China continue to deepen its reform and opening-up policy, so as to provide a level playing field for foreign companies operating in the country. The industry could unite as one to address the challenges and make breakthroughs in the midst of the pandemic.

Q3 Innovation has been the bedrock of China's modernization. What new opportunities can you foresee for the world in China's pursuit of innovation-powered high-quality development?

DING: We see many growth opportunities in China across our leading businesses, including industrial, electronics, automotive, healthcare, air quality and safety. For example, people across China trust 3M to keep them safe in their homes and workplaces, and we take that responsibility seriously. China's investments in modern manufacturing and infrastructure development will bring new opportunities for 3M. As an innovation-driven company, we are excited about business opportunities arising from China's renewed focus on innovation and high-quality development.

ECKERLEIN: Innovation will continue to be a major driver of economic growth in China. The country has put a lot of focus on technological innovation, and decades of rapid economic growth have enabled China to invest more in key areas that drive innovation.

Since the local launch of ABB Ability (TM) in 2017, we have established open innovation hubs in Xiamen, Shanghai and Beijing and worked together with Chinese partners and customers to jointly develop customized digital solutions in the areas of smart manufacturing, smart city, smart transportation and smart energy infrastructure, helping them improve performance and efficiency and reduce energy consumption and emissions.

KHAOU: China's innovation-driven development strategy will continue to unleash market potential. Over the past 17 years, Dassault Systemes has firmly rooted itself in China and works closely with leading local companies in key industries. We will deepen our commitment to the Chinese market, explore new opportunities and enhance the services we provide to our customers. The adoption of virtual twin technologies will provide them with new opportunities for their industrial upgrading and long-term development.

GAO: We very much agree with China's emphasis on innovation. In recent years, we are seeing that China is consistently strengthening innovation development. We believe that the awareness and environment of IP protection in China have been increasingly improved under this trend.

A good innovation environment could attract more multinational companies to invest in China, not only in manufacturing, but also in R&D. It could also attract more innovation talent. China's high-quality development with a fairer competition environment gives MNCs great opportunities who also benefit from market development and market demand for high-end products.

GUO: With the nation's innovation-driven development strategy, we firmly believe that opportunities will emerge in sectors like aviation manufacturing and civil aviation transportation, which are undergoing rapid technological innovation to meet market demand and reduce carbon footprints.

This is also a key opportunity for Embraer to evolve in China. We are joining hands with our partners to explore innovative ways for the green transition of the aviation industry, including new energy sources like sustainable aviation fuel, new aircraft designs and new propulsion systems.

Q4 What's your take on China's dual carbon goals, which have received a thumbs-up globally? Do you see big business opportunities arising from the country's carbon goals?

DING: 3M looks to explore new business opportunities in green development by working closely with government bodies, enterprises and research institutes, and we will continue to apply our advanced technology to these areas and make new contributions to the development of green economy in China, such as water-based industrial adhesives for Chinese home appliance manufacturers. We will continue to work with stakeholders in China and around the world to create a cleaner, safer future for us all.

ECKERLEIN: China is playing a critical role in tackling climate change. A recent international survey by ABB shows that 71 percent of Chinese companies surveyed aim to achieve net zero within five years, and nearly all expect their investment in energy efficiency improvements to increase over the next five years. China's dual carbon goals have created many new opportunities for businesses. At ABB, we support expanding the Chinese EV charging network, helping to build a monitoring network to detect greenhouse gas emissions, deploying high-efficiency electric motors and drives to reduce energy consumption in buildings and industries, and collaborating with local hospitals and biotech companies to develop robotic solutions for healthcare.

KHAOU: China is the world's largest energy consumer. Its dual carbon goals show a deep commitment to supporting global efforts to address climate change. This commitment is in line with global energy trends and is befitting of a responsible major country. China's dual carbon goals will undoubtedly generate huge opportunities for businesses. Achieving the goals will require companies to transform the way they manage their products and services across the entire lifecycle, from design, manufacturing and use to end-of-life.

GAO: As the world's second-largest economy, China's greenhouse gas emissions are also huge. But China has already formulated serious policies and measures to reduce CO2 emissions. China's commitment and actions on CO2 reductions have given the world more confidence in reaching its global climate targets. We could say that without China's participation and commitment, it is impossible to manage the global environmental crisis.

The dual carbon goals have led to more demand for high-end and low-carbon products and solutions in China. In order to meet the requirements, cooperation is needed to jointly explore carbon reduction technologies, carry out R&D activities and promote the technologies' maturity and implementation.

GUO: China's climate actions are critical to the planet's net-zero future, and it will contribute largely to a reduction of emissions globally. China has set an early timeline for peaking carbon emissions, and clearly mapped out a path after peaking. The dual carbon targets cannot be met without ambitious actions taken in various sectors, including aviation.

We believe the government will increase investment in sustainable development and promote support for various green projects. Embraer has announced a commitment to achieve the aviation industry's goal of net-zero carbon emissions by 2050.

Q5 What's your view on modernization in China that has spawned common prosperity? What does this pursuit mean for foreign businesses?

DING: Common prosperity needs the participation of all sectors of society. Foreign businesses have a big role to play in it.

Over the past decades, 3M has kept pace with China's economy and community development. Our China team is passionate about giving back to our communities.

We are a longtime supporter of STEM education in China, which includes inviting students into our R&D center for hands-on experiments and training. For 10 consecutive years, 3M has led a School Zone Safety Program across the country. We partner with traffic police officers and help upgrade neighborhoods around schools with 3M's leading traffic safety solutions.

ECKERLEIN: As ABB's second largest market worldwide, China continues to present many opportunities for our electrification and automation solutions. At the same time and in line with our 2030 Sustainability Strategy, we have committed ourselves to promote social progress through a range of activities focused not just on our own employees but also on the communities we operate in.

In our communities around the world including China, we are reinforcing our long-standing commitment to community engagement by providing impactful support for community-building initiatives across three pillars: education, diversity and inclusion, and care in the community.

KHAOU: Dassault Systemes is proud to actively contribute to the modernization process in the field of aerospace, transportation, shipbuilding and construction.

Dassault Systemes expects China's economy will continue to reach new levels in terms of scale and quality of development. We believe that the country's ongoing modernization will create more opportunities and space for business growth and people's well-being.

GAO: The ultimate goal of modernization and economic development is to create better lives for people. Germany has always attached high importance to social welfare and has established a comprehensive social security system.

Thyssenkrupp has already introduced an employee welfare program in its early stage. We not only focus on short-term interests, but also take into account the long-term development of the company and its contributions to society.

It is a natural thing for a good corporate citizen to provide high standard labor protection and to care about employee health and safety, and we support all companies to follow the same rules in order to create a fairer competition environment.

GUO: We believe aviation will be the industry that benefits most in the journey to eliminate absolute poverty across the country, and we hope to accomplish the common prosperity goal because it will allow more people to afford air travel.

Embraer is also doing its part to contribute to China's common prosperity. Data show that there are still 1 billion Chinese who have never flown before. Embraer's commercial airplanes can go deep into the network of regional markets and help ensure the rise of living standards of Chinese people.