File photo shows a view of the Lujiazui area in Shanghai.Photo:Xinhua
From recruiting more employees to setting up new enterprises, many foreign companies could not wait to announce plans for increasing investment in Shanghai just days after the Omicron-battered city lifted a two-month lockdown, as overseas investors continue to show their confidence in and commitment to the mainland market in spite of external challenges.
Their move to expand, not cut, investment in China is a vivid testimony of the unswerving appeal of the mainland market to overseas investors, as they see its long-term potential, as well as the advantages of setting up factories in mainland, as being much more important than the “one-time short period shock” of the coronavirus impact, experts said.
They also predicted that China’s foreign investment inflow will keep a positive trend now that cities like Shanghai and Beijing have basically walked out of the COVID-19 shadow, and as China rolls out a basket of policies to stimulate economic growth and attract foreign investment.
Hire more, invest more
In the first week after Shanghai announced it was lifting two-month lockdown, a number of overseas companies announced they will expand investment in Shanghai, in stark contrast to what some overseas media claimed were foreign investors “fleeing” China as a result of strict domestic COVID management measures.
Some companies are rushing to roll out recruitment plans in China to replenish talent reserves for their local business. For example, global semiconductor giant ASML announced to expand their team in China this year, with a target of hiring more than 200 employees, according to a statement sent by the company to the Global Times on Tuesday.
“The impact of the pandemic is temporary, and the importance of the China market and the ongoing positive trend of China’s economy remained as before,” the statement said, adding in particular that the recent closed-loop operations, resulting in their employees working and living in factories, is an “unforgettable experience” that would deepen their partnership.
Likewise, Tesla rolled out a hiring campaign in late-May, providing dozens of positions for their Shanghai-based research & development innovation center.
Some companies are eyeing expanded investment by opening more stores in China. Starbucks, for example, opened a new shop in Shanghai’s Qingpu district on Saturday, while the company is also planning to open new stores in mainland cities including Shanghai in the future, CEO of Starbucks China Cai Delin told the Global Times.
“We will continue to increase investment in China, and use concrete action to show our confidence and commitment to the Chinese market,” Cai said.
Those companies’ moves to expand or prepare for further investment in China are examples of a continued trend recently for overseas investors to ramp up investment in China despite external economic challenges. According to a report published by the China Council for the Promotion of International Trade in late May based on a survey, around 90 percent of the foreign enterprises surveyed maintained or expanded their business scale in China in the first quarter, while about half of the companies regard China as the world’s top investment target.
Many companies have set up new branches in China in recent months. French cosmetics giant L’Oreal, for example, set up its first investment subsidiary in Shanghai in May, the company told the Global Times via a written statement, in which it said the investment represented the company’s “extremely solid” pledge for the Chinese market.
Foreign direct investment into the Chinese mainland, in actual use, went up 26.1 percent year-on-year to $74.47 billion in the first four months of this year, according to the Ministry of Commerce (MOFCOM).
Major foreign-funded projects also registered steady expansion in the first four months with government efforts to overcome the impact of the pandemic and actively attract investment. In the January-April period, China saw 185 newly-added major projects, each with foreign investment of over $100 million, which means 1.5 major foreign-funded projects were launched on average each day, according to the ministry.
The companies’ moves to increase investment comes amid China’s success in battling the Omicron outbreaks with strict but orderly management. It also comes as the country has continuously rolled out economic stimulus policies to push forward the economy, including measures that support opening-up and creating a fair business environment for overseas companies.
Speaking at a symposium on the 70th anniversary of the China Council for the Promotion of International Trade (CCPIT) last month, Chinese Premier Li Keqiang reiterated China’s stance to unswervingly expand its opening-up and continue to make the country a big market for the world and a hot spot for foreign investment.
The State Council launched a basket of 33 measures to stabilize economic growth recently. According to the measures, China will speed up amending the overseas investment industrial catalogue to guide foreign capital toward high tech and advanced manufacturing industries, as well as further expanding companies’ cross-border financing channels.
Shanghai has issued a plan to carry out 10 major missions for improving the business environment, according to cnstock.com on Tuesday. The measures include cutting account management fees and annual fees for micro enterprises, as well as promoting digital invoices.
Experts stressed that the resilience of China’s economy, its huge market size and China’s zero-COVID approach to create a safe environment for economic development in most regions, as well as its long-term positive fundamentals offer stable profit expectations and confidence to foreign investors against a backdrop of a sluggish global economic recovery.
“The impact of the resurgence of COVID-19 in Shanghai is a one-time short-term shock. Therefore, once the epidemic ebbs, foreign enterprises are expected to resume their investment plans as scheduled,” Cao Heping, an economist from Peking University, told the Global Times on Tuesday.
Experts also predicted that China’s inflow of foreign investment will keep up the momentum in the second half of this year because of the advantages of China’s anti-epidemic approaches, its pledge to stabilize and attract foreign investment and the implementation of 33 stimulus measures.
According to Cao, this round of economic stimulus should release capital amounting to about 12 trillion yuan, which will drive investment of over 20 trillion yuan and consumption of over 30 trillion yuan. In general, Cao predicted that China’s economy could grow by about 5 percent this year.
The overseas companies’ actual moves in China to increase investment is also a vivid refutation of some overseas reports that claim overseas capital is flowing out of China after the recent Omicron outbreaks, analysts said.
According to the Economic Daily on Tuesday, the argument about multinationals having pessimistic development prospects in China cannot stand up to scrutiny, as China’s connection with multinationals grows closer, and the country’s role in global supply chains and industrial chains becomes more important than ever.