Why does China always attract more foreign investment?

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Foreign companies are looking for new opportunities in the Chinese market as the country remains one of the top investment destinations despite the headwinds facing the global economy.

Foreign direct investment (FDI) in use in mainland China rose 37.9 percent year on year to 243.7 billion yuan in the first two months of this year, according to the latest data from the Ministry of Commerce. In USD terms, acceptances increased 45.2% year on year to $37.86 billion.

(Photo/Xinhua)

This strong growth was supported by a record 1.15 trillion yuan in FDI in 2021, as China’s solid economic fundamentals and steadily improving business environment continue to attract foreign capital.

Increasing consumer demand combined with a huge market in which the transition to more sustainable development continues has brought some of the most attractive opportunities for foreign investors.

Searching for a better life

From a small office in China, Amorepacific Corporation, a South Korean beauty and cosmetics conglomerate, has been one of the beneficiaries of China’s rapid growth over the past 30 years. Leveraging an industrial park in Shanghai, Amorepacific now offers a wide range of products and services from skincare to color cosmetics in more than 5,000 stores in 250 Chinese cities.

Mike Hwang, president of Amorepacific China, said that Amorepacific’s growth in China was mainly driven by rising Chinese living standards. “Chinese consumers are demanding a better quality of life as government goals such as shared prosperity encourage more comprehensive and balanced development of the country’s market. It has given us a new direction for business development and created new momentum for growth.”

Amorepacific’s success reflects China’s years of effort to provide a better life for its people, which has created great job opportunities for global investors. China’s middle-income population group grew by more than 100 million in 2010 to over 400 million in 2019, making up about 30% of the total population. Meanwhile, the Beijing 2022 Winter Olympics and Paralympic Games, which have just ended, have created new consumer trends as sports like skiing are rapidly gaining popularity and attracting new interest among investors.

Decathlon, one of the world’s leading sporting goods retailers, is one of many companies jumping on the bandwagon to take advantage of new deals. “The sports industry is closely linked to economic development,” said Daisy Wang, Vice President of Decathlon China, noting that Chinese consumers are increasingly adopting healthier lifestyles and taking an interest in niche activities such as skiing and camping. We play an active role in that,” she said. Reminding that sports expenditures in China should represent more than 4% of total GDP by 2035, Wang said, “Decathlon has every confidence in the future of the Chinese sports market.”

Sustainable growth

As an important part of high-quality development, China’s low-carbon road has given new impetus to green development globally.

For Vale, a global mining company, the country’s efforts to transition to a low-carbon economy present great opportunities. The Chinese market remains the largest market for Vale since 2006. In 2021, Vale joined as one of the founding members the Global Low Carbon Metallurgical Innovation Alliance initiated by China Baowu Steel Group, the world’s largest steel conglomerate.

“Vale always puts China at the center of its business strategy,” said Tracy Xie, President of Vale China, adding that he is confident the company will contribute to China’s green transformation with its product portfolio and technical solutions.

China has committed to maximizing its carbon dioxide emissions by 2030 and achieving carbon neutrality by 2060, achieving the world’s largest reduction in carbon emissions intensity in the shortest timeframe.

According to a report by French bank Societe Generale, China’s green investments are expected to reach 2.2 trillion yuan per year in the current decade, this amount will rise to 3.9 trillion yuan between 2031 and 2060.

“We see great potential in China’s green finance,” said Peter Qiu, chairman of Deutsche Bank (China) Co Ltd. The company will take full advantage of its role in financing sustainable development to help Chinese companies better capture the opportunities presented by the green transition.

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