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China still holds appeal for foreign firms

Updated: Feb 24,2016 5:33 PM     english.gov.cn

China’s attractiveness to foreign investment remains, Xinhua News Agency reported.

The statistics from the Ministry of Commerce show that a total of 26,575 foreign-invested companies were set up in 2015, an increase of 11.8 percent from the year before. And 781.35 billion yuan ($119.58 billion) of foreign investment was utilized in 2015, an increase of 6.4 percent from the previous year.

This shows that while the growth of foreign investment utilization has slowed, growth remained steady and the so-called large scale of disinvestment has not occurred.

There had been speculation concerning disinvestment as some foreign companies closed their businesses in China.

In December, Nokia shut a factory established in Suzhou in 1998, the third factory the company has closed in China.

In the same month, Deutsche Bank announced that it had “agreed to sell its entire 19.99 percent stake in Hua Xia Bank to PICC Property and Casualty Company Limited”.

Feng Yi, a post-doctoral researcher at Zhejiang University, said it has become common in China for foreign-invested companies at the lower end of the manufacturing sector to close or move their factories, as China’s manufacturing undergoes an upgrade and labor costs is increase.

Companies, such as Nokia, readjusted their investment due to intensified competition in China, while some foreign banks did so due to the global economy or because of stricter supervision, he said.

On the other hand, the structure of foreign investment is improving. The country’s service industry utilized 477.1 billion yuan of foreign investment in 2015, an increase of 17 percent from the year before.

The manufacturing sector saw 245.2 billion yuan of foreign investment in 2015, basically the same as the year before, while foreign investment utilized in manufacturing increased 9.5 percent.

On the other hand, last year the country hardly approved any new foreign companies setting up in industries with overcapacity, such as steel and cement.

The roof of the maintenance center of Canadian manufacture of planes and trains Bombardier, which was set up in Tianjin, was sealed recently. In July 2015, the aircraft maker Airbus decided to expand its investment in Tianjin by establishing a completion and delivery center for A330 aircraft.

Also, four leading automation technology companies - the ABB Group, KUKA Aktiengesellschaft, Yaskawa Electric and FANUC have all set up companies in China.

China has become the hottest market for companies in robotics and smart equipment around the world, said Qu Daokui, president of the China Robot Industry Alliance.

China’s west is also increasing its appeal to foreign investment. In 2015, nine Fortune 500 companies set up in Chengdu, capital of Sichuan province, which now hosts 219 Fortune 500 companies.

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