Editor’s note: The Government Work Report, delivered on March 5, charted a course for China’s economic development for the coming year. By setting fairly robust growth targets, the country is set to be the locomotive pulling the world economy amid global economic headwinds. In addition, a number of pro-growth efforts have been unveiled to spur innovation and continue opening-up. Rapid progress has seen China storming up the charts in the World Bank’s annual report on the business environment. The country is on course to enact a foreign investment law to better protect the lawful rights of foreign businesses in China in a concerted manner. China Daily has polled senior executives from multinational companies to learn about their positioning, perception and predictions for the Chinese market.
Q1. This year marks the 70th anniversary of the founding of the People’s Republic of China. What do you see as China’s biggest achievements to date? What are your company’s biggest achievements in the country so far?
Q2. China’s economic growth moderated to 6.6 percent last year as the focus shifted to high-quality growth. How does your China strategy fit the new trend?
Q3. What are your thoughts about the draft foreign investment law that will be adopted by national legislators this year? How will China’s ongoing efforts to further open up the economy and protect the legitimate interests of foreign companies help your business?
Q4. China is committed to high-quality manufacturing, and the government has stressed the importance of technological innovation. What do Chinese companies need to do to move up the value chain?
Q5. What are your views on the government’s ongoing efforts to cut red tape and improve work efficiency?
Celina Chew, President, Bayer Group China
A1 The biggest achievements are in the areas of social and economic development, and in China’s global impact. China has transformed itself, with dazzling speed and scale, from a country with a small economy and very little infrastructure, to a significant economy that is stable and prosperous, and leading the world in several aspects like industrialization and digitalization.
A2 China’s pivot to higher-quality economic growth, focused on innovation and sustainability, very much fits into Bayer’s strategy for China. China’s road map, “Healthy China 2030” fits very well with Bayer’s product portfolio across our areas of expertise in pharmaceuticals, consumer health and crop science. China’s Internet Plus initiative inspires us to keep up to date with digitalization and technology trends, including collaborating with local companies like Alibaba and JD.
A3 The draft foreign investment law is an indication of the Chinese government’s willingness to further open up its market to foreign businesses and address concerns that have been expressed by foreign investors, especially viewed in the context of other initiatives like the negative list and free trade zone systems. We appreciate China’s efforts in this regard and encourage additional initiatives to open up the Chinese market, especially for innovative products and technologies.
A4 The 2018 Government Work Report indicated that China would accelerate the development of big data, cloud computing and digitalization in order to transform traditional industries and improve manufacturing capabilities. To achieve this, it is very important for China to cultivate and attract the right talent. Apart from talent with the right technological (and STEM) capabilities in these fields and the right mindset, it is also important to create an open and inclusive environment to support innovation and spark new ideas. The willingness to upgrade facilities with advanced manufacturing technology is also crucial.
A5 We appreciate China’s efforts to improve work efficiency and productivity. By streamlining approval processes and bringing more clarity to regulatory enforcement, more high-quality products can be brought to China faster, which benefits the Chinese people. One example is the faster approval of innovative drugs to China as a result of drug regulatory reforms. We hope to see similar regulatory reforms in the agrochemicals and agricultural biotechnology sectors.
Doug Cai, President, Bombardier Aerospace China
A1 When we talk about transformation or development, I believe every country and every business starts with a simple desire — that is, to make people’s lives better. While it took Western countries roughly 300 years to lift around 700 million people out of poverty, China achieved that in just around 30 years. That is truly unprecedented and unparalleled in human history. In the next two years, we target achieving double-digit revenue growth. By 2020, Bombardier will become a $20 billion business, and our China operations will definitely be a key part of this growth journey.
A2 With the current size of China’s economy, 6.6 percent is already formidable growth.
The incremental growth in 2018 has well exceeded that of 2007, when China was growing at 14 percent. If we look at some of China’s national priorities — sustainable urbanization, the Belt and Road Initiative, and environmental protection — all of them call for more efficient and sustainable transportation, and are well-aligned with Bombardier’s portfolio and expertise.
A3 We welcome and look forward to the change. China’s continuous opening-up efforts, for example, in aircraft MRO (maintenance repair and overhaul), will bring more and more business opportunities for us.
At Bombardier, we always have a long-term belief in China, and we aim to become a fundamental and integral part of China’s aerospace industry.
A4 The development of the aerospace industry is very important for China to achieve its goals (in upgrading its manufacturing sector), and in this regard, collaboration with Western companies is the key. Bombardier is well positioned to work with Chinese companies to support this vision. As a long-standing player in the aerospace industry, Bombardier boasts the capabilities of designing and manufacturing aircraft and aerostructures, as well as the full spectrum of related engineering services.
A5 Though China still has a number of issues to deal with, it has already shown tremendous capability to evolve its system and address its issues over the past decades.
From our perspective, we believe in China and its ability to continue growing and evolving. China is no doubt at the core of Bombardier’s geographic expansion and our global success. We are fully committed to bringing more advanced aerospace products and solutions.
Jan Craps, CEO and President, Asia-Pacific, at AB InBev
A1 The incredible development of the Chinese economy over the past few decades has undoubtedly been one of its greatest achievements. The recent maturity of the economy — where it has transitioned to steadier, more sustainable growth underpinned by economic reform — is also a significant accomplishment. Also, one of the most transformational successes of the country has been the leadership it has taken in digitization of the consumer landscape; China is now leading the world in this space.
We started our business in China over 30 years ago, and it is now one of our top five countries in terms of revenue and volume.
A2 We are very optimistic about the future of high-quality growth in China, in particular for consumer goods. The foundation of our strategy in China is a focus on premium products and bringing a portfolio of options for our consumers — and this is consistent with the underlying consumer market trends we are witnessing in China, such as premiumization and steady growth of disposable income. We are supporting this with a big focus on building new capabilities that will be key for sustainable market-leading performance over the long-term, such as investment in new beer styles, e-commerce, digital marketing and analytics.
A3 The new draft indicates that the Chinese government is willing to further open up the market to foreign businesses, and to also address some key concerns amongst foreign investors. This is a positive development. We think these developments provide positive signals to foreign investors and give a strong basis for confidence to invest and create sustainable growth in China.
A4 As a manufacturer, digital transformation is something that is impacting all levels of our business across the world — and the changes are particularly acute in China. Value chains are very quickly evolving with this technological innovation, so it is important that Chinese companies adjust in the right way. This requires very careful resource allocation, recruiting the right talent and skill sets, and having a clear plan about how technology and digital transformation will add value to the company.
A5 I am a big fan of driving simplification and efficiency, both within business and within government. This is a big priority for us as a global business.
Regulatory efficiency and clarity of process are also crucial enablers for a strong marketplace, and the government has an important role in supporting this.
We are very supportive of the Chinese government’s continued efforts and believe strongly that this will deliver further benefits for the economy.
Stephane Rinderknech, CEO, L’Oreal China
A1 China went from a country that had just emerged from a planned economy to the second-largest economy and consumer market in the world; from a world factory to one of the world’s innovation hubs. It is using more power responsibility as a new leader to drive globalization.
Our beauty legend in China started with a dream of “putting a lipstick in the hands of every Chinese woman” and led us today to champion China’s beauty market.
A2 We did not witness any sign of an economic slowdown in 2018. We are confident in the long-term prospects of China’s economy as reform and opening-up continues. Beauty is a permanent aspiration. Today, Chinese consumers’ beauty aspirations keep evolving. Consumers are becoming more sophisticated, and value quality and efficacy over price tags, which brings about opportunities for L’Oreal.
A3 It is widely anticipated by foreign companies, and is a signal of China’s firm determination to further open up, improve the business environment and push forward globalization.
An increasingly open, fair, predictable and favorable business environment protected by legislation will definitely help us develop with lower costs and greater efficiency.
A4 We applaud the exciting progress Chinese companies have made in moving up the value chain across various industries. We are looking forward to their greater strides in becoming more consumer-centric, market-oriented, innovation-driven and talent-empowered to strengthen their competitive edge in an ever-changing and more globalized market.
A5 We welcome the government’s continuous efforts to streamline administration and build a world-class business environment. L’Oreal has been increasingly benefiting from these efforts.
As concrete action, the online filing mechanism for non-special-use cosmetics piloted in free trade zones greatly increased our efficiency in introducing premium and high-quality products to Chinese consumers to meet their aspirations, for the first time on a par with their global counterparts.
We are happy to witness a series of new and innovative initiatives from the start of this year from all over China and are looking forward to their effective rolling out, like Shanghai’s one-stop online service hub.
Tony Acciarito, President, Thermo Fisher Scientific China
A1 For Thermo Fisher, China is a critical market. Today, China is the second-largest country by revenue for Thermo Fisher. Thanks to the favorable business environment, Thermo Fisher has been partnering with our customers in China for over 35 years and now has become a business with 5,000 employees in China. Thermo Fisher’s mission is to enable our customers to make the world healthier, cleaner and safer.
Our products and solutions have been applied into many vertical market segments closely related to our daily life such as healthcare, pharma and biopharma, food safety and the environment.
A2 We continue to hold an optimistic attitude toward China’s economic development. With the government leveraging its scale to conduct massive reforms, the country will continue to sustain growth in the future. There will be great opportunities for the company to continue to grow fast in the future.
From an industry perspective, we expect partnerships in our key-focused vertical markets, including healthcare, food safety, environmental as well as pharma and bio-pharma.
We will remain committed to this important market by working alongside our customers to meet the Chinese government’s policy priorities in order to contribute to a healthier, cleaner and safer China.
A3 We are very grateful for the Chinese government’s support of global trade liberalization and opening-up. We are interested in the regulatory development of the foreign investment law and the Patent Law. We hope that implementation of such laws will improve operations and intellectual property rights protection for multinational companies in China.
A4 I believe innovation is key to our success in China, and it is critical to ensure our innovative solutions and technology work developed “in China, for China”. We need to look into local demand and (the) social environment.
Only by helping solve local challenges can we have the opportunities to expand our local footprint and enjoy the rapid economic development in China.
A5 We highly appreciate the government’s efforts to cut red tape. From our perspective, cutting red tape will absolutely help us to execute our “in China, for China” strategy and accelerate the progress of our local investment and cooperation.
Judy Marks, President, Otis Elevator
A1 In building the world’s second-largest economy, China has lifted hundreds of millions of people out of poverty and created a thriving middle class. That has to be China’s proudest achievement.
The reform and opening-up policy adopted 40 years ago paved the way for this economic transformation and all it entailed, including urbanization, industrialization and China’s own technology revolution.
We are proud of our role in supporting China’s drive toward urbanization. We formed our first joint venture here in 1984. Today, we operate five manufacturing facilities and employ more than 15,000 people in China.
A2 Otis is a company built on innovation. Today, some of our most important research and development is taking place in China.
Last year, we inaugurated a new Lead Design Center in Shanghai, our largest research facility in the world. Development work on our next generation of elevators is being done there.
We were also the first elevator company in China to equip mechanics with smartphones — a key component of our global digital service strategy.
A3 Enhanced intellectual property protection for all investors, equal treatment for foreign investors, and other concrete, enforceable protections of investment are key to sustainable growth in China. Any final measure including these elements will be a significant step forward in further opening China’s economy to foreign investment.
A4 Data analytics, intelligent machines and the internet of things are redefining how products are designed, factories are run, service is provided, and, most important, what customers demand.
We are investing in these technologies to enhance our products and services to better serve our customers. Likewise, many Chinese companies are taking a similar, complementary path to create opportunities.
A5 We applaud the government’s efforts to improve the country’s business environment by cutting administrative red tape. We’re especially encouraged by the move to make processes more efficient and less prone to bureaucratic bottlenecks.