Confidence runs high as executives eye China

French corporations, from Michelin to Air Liquide Group, see host of opportunities

French companies are adamant about continuing their investments in China, as the country's consumption power, industrial upgrading and opening-up are confidence boosters, market watchers and business executives said.

"We are much more confident that 2023 will be a great year for growth, partnership and expansion. China will continue to develop its economy in a good way," said Christophe Lauras, president of the French Chamber of Commerce and Industry in China.

Lauras reiterated that France has always been an active and friendly economic partner of China.

"With China optimizing its COVID-19 response measures, we will see an improvement in business confidence and investment plans from many French companies this year," he said.

Data released by the Ministry of Commerce showed that foreign direct investment into the Chinese mainland, in terms of actual use, rose 6.1 percent year-on-year to 268.44 billion yuan ($39.06 billion) in the first two months of 2023.

Notably, high-tech industries saw an FDI increase of 32 percent on the same period of 2022. Specifically, foreign investment in high-tech manufacturing soared 68.9 percent year-on-year, while that in high-tech services surged 23.3 percent on a yearly basis.

To ease the pressure caused by factors ranging from waning global goods demand to geo-economic shocks, China has accelerated the pace of unleashing its market potential. Multinational corporations have been tapping market trends and speeding up their investment layout, especially in the areas of high-end consumption and manufacturing, healthcare and green energy development, said Wang Huiyao, president of Beijing-based think tank Center for China and Globalization.

Zhang Xiaoyu, president for China at Arkema, a French manufacturer of specialty materials, said that with China optimizing its COVID-19 response and vowing to make greater efforts to maintain steady foreign investment growth, the company remains confident and ready to contribute to the development of local industry.

Eager to enhance its earning strength, Bostik, a subsidiary of Arkema, announced plans to increase its investment by 400 million yuan in new businesses and to develop new products in Shanghai in December 2022.

"Besides, as China's technological innovation capacity continues to grow, the speed and level of industrialization in new technologies increases. China is nowadays the world leader in many emerging industries, including new energy vehicles, 5G, solar energy and other areas," she said, adding Arkema has been participating in the development process of these emerging industries in China with its partners.

Similar views were expressed by Ye Fei, president and CEO of Michelin China: "The market for new energy vehicles in China has been expanding rapidly. Given the rise in market share and consumer identification, the French tire and mobility company believes this growth momentum will persist in 2023 and inject strong impetus into its growth in China."

Ye said China's development aspirations are in line with Michelin's long-term efforts. Michelin is devoted to developing products and solutions that meet the needs of Chinese consumers, and to achieving sustainable development within the industry and wider society. During this journey, the company must capture two major opportunities; the circular economy and disruptive technology.

He said that opportunities of the circular economy lie in global common visions to lower carbon emissions, promote clean energy and improve biodiversity. This will prompt foreign companies in China to align their growth strategies toward sustainability.

"As more Chinese cities and companies gear up for the deployment of smart mobility, we must make breakthroughs in disruptive technology, particularly smart digital solutions in China in the coming years," Ye added.

In addition to offering tire products in China's vast market, Michelin plans to deploy more resources in high-tech materials, 3D metal printing and hydrogen mobility between 2021-25.

By establishing a joint venture with Faurecia in 2019, Michelin has been accelerating the development of new-generation fuel cells, launching mass production and increasing its business in China, Europe and the United States.

Compared to traditional fossil fuels, hydrogen is considered a clean and promising vehicle fuel. Hydrogen vehicles, powered by electricity generated by compressed hydrogen fed into fuel cells, have zero greenhouse gas emissions and produce only water, electricity and heat.

According to a report released by the Beijing-based China Machinery Industry Federation in February, China's goals of peaking carbon dioxide emissions by 2030 and achieving carbon neutrality by 2060 will push automobile consumption patterns and industrial structures to transform to electric at the policy level.

Over the past few years, China has made great progress in improving the business environment by significantly reducing the number of restricted industries. This has deepened the opening-up of the manufacturing sector and eased the entry of service industries into its pilot free trade zones, said Nicolas Poirot. He is president and CEO for the China unit of Air Liquide Group, a French industrial and medical gas supplier, which runs 120 plants in the country.

"Aligned with our long-term business strategy, we will look at opportunities and explore growth in the areas of hydrogen energy, electronics, high-tech manufacturing and medical care," said Poirot.

"We will further promote the development of the entire industrial chain of the local hydrogen energy industry, actively share Air Liquide's expertise in hydrogen production, transportation and storage technologies, and support local new forces in clean mobility," he added.

By engaging in the local supply chain, especially in the Yangtze River Delta region and the Guangdong-Hong Kong-Macao Greater Bay Area, Air Liquide has supported advanced semiconductor manufacturers with advanced precursors to develop its business in the field of electronics.

With the new catalog of encouraged industries for foreign investment coming into full effect, Poirot said the industry landscape in China will see more investment in advanced manufacturing sectors. This includes electronics, autos, shipbuilding and pharmaceuticals, to which it supplies essential molecules and systems.

"We will also take part in optimizing the regional distribution of resources and upgrading industrial transformation by expanding cooperation in the central and western regions to contribute to a more balanced development," he added.

To better meet the needs of multinationals, the Chinese government announced recently that it will strengthen regular exchanges with foreign-invested companies and overseas business associations, and fully implement the national treatment of foreign-funded companies.

On March 15, at a news briefing dedicated to foreign businesses in China, Vice-Minister of Commerce Sheng Qiuping reaffirmed China's commitment to advancing opening-up.

Sheng introduced in detail the positive signals released by this year's Government Work Report as well as the country's favorable conditions for foreign businesses to expand investment. Those include its growing market scale, extended incentives from opening-up policies and emerging growth momentum.