Multinational Corporations Still Confident to Invest in China's Economy

Due to the global financial crisis, many multinational corporations (MNC) are suffering from sharp contraction, with some of the enterprises these MNCs established in China encountering certain challenges.

On February 21, the Vice Premier of China's State Council presided with a symposium for foreign-funded enterprises held by the State Council in Shenzhen. Quite a number of senior executives of the MNCs praised for the Chinese government's decisiveness in tackling the global financial crisis, saying that they have full confidence in the long-term development of the Chinese economy, and expressed their enthusiasm of further investments in China.

Financial crisis' impact on foreign-funded enterprises

The financial crisis has had a huge impact on China's economy, and the foreign-funded enterprises are no exception. Some ongoing foreign-funded projects have slowed down or have been cancelled, some export-oriented foreign-funded enterprises have received less orders from overseas, the performance of some foreign-funded enterprises have declined noticeably, some enterprises have had difficulties in their operations with a deteriorated financial situation and some have had to partially stop production. Research and development centers of a few MNCs headquartered in China downsized their staff substantially.

Some foreign-funded enterprises have encountered certain difficulties in their operations and the number of new foreign-funded projects has dropped noticeably due to the impact of the financial crisis, said the representatives during a symposium hosted by the Ministry of Commerce on foreign investment work in certain provinces and municipalities.

In January 2009, China's actual use of FDI was 7.541 billion USD, down 32.67 percent year-on-year. This was the fourth consecutive month that FDI in China recorded negative growth since October 2008.

China's concern for difficulties raised by foreign-funded enterprises

The symposium for foreign-funded enterprises held in Shenzhen aimed to collect opinions from MNCs investing in China, and to help them overcome the impacts of the financial crisis while building their confidence towards investing in China.

High-level executives and officials from 51 MNCs and foreign chambers of commerce in China attended the symposium. Most of these MNCs are Fortune 500 companies. The officials in attendance at the symposium included 20 global vice presidents, 16 presidents of the Asia-Pacific region and 15 MNC presidents from the China region, as well as leaders from the US-China Business Council, the European Union Chamber of Commerce in China and the Japan-China Investment Promotion Organization. In addition, officials from more than 10 relevant ministries and commissions under the State Council, including the National Development and Reform Commission, the Ministry of Finance, the Ministry of Commerce, the China Banking Regulatory Commission, the People's Bank of China, the Ministry of Science and Technology and the General Administration of Customs were also present at the symposium.

The government will carefully consider the issues raised by the MNCs, work with the enterprises to counteract current hardships, and help them seek out more development opportunities in China, stated Chen Deming, Minister of Commerce, on behalf of relevant ministries and commissions under the State Council.

The State Council is preparing to use finance and taxation measures to help export-oriented enterprises that are having difficulty exporting goods to expand their domestic sales volumes and to offer domestic financing to enterprises encountering temporary financial crises.

Although most foreign-funded enterprises are experiencing falling performance, they can still maintain normal operations at present. A minority of them are facing more difficult situations, but as China gradually carries out supportive measures, these foreign-funded enterprises will soon be able to bounce back, said Liu Zhiben, Executive Vice Chairman of the China Association of Enterprises with Foreign Investment.

China still attractive to foreign investment

High-level executives from 14 enterprises, including the ABB Group, Best Buy, the A.P. Moller-Maersk Group, Accenture, Taida Electronic, Hopewell Holdings and the Kerry Group, expressed their confidence in investing in China during the symposium. They also offered suggestions on issues including investment facilitation, criteria for determining high and new-technology enterprises and national treatment.

The global financial crisis brings new opportunities to countries which boast low costs like China. ABB will increase investment in China. It will also recruit and train more people, said Brice Koch, Senior Global Vice President of the ABB Group and President of ABB North Asia. He believed that China's four trillion yuan investment plan to boost domestic demand will ensure that China's economy will maintain a rapid growth momentum in the long term. It will also create new opportunities for MNCs in China. The ABB Group hopes to play a greater role in China's economic construction.

Best Buy, a globally-renowned retailer headquartered in the US, sees China as its largest purchase market. The retailer opened five new stores in China last year and its future investment in China will not decrease, said the company's Asia-Pacific President Yang DeMing.

Charles Hunting, Managing Director of Outsourcing for the Asia-Pacific region of US' Accenture, a renowned global technology and management consulting company, highly praised the policies recently enacted by the Chinese government to accelerate the development of the service outsourcing industry. China has excellent talent and infrastructure, as well as enormous potential to develop the service outsourcing industry. It is for this reason that MNCs have paid increasing attention to China's service outsourcing market, he said.

The impact of this global financial crisis on China is relatively small and China is still very attractive to foreign investment owing to its relatively stable financial system, sound economic fundamentals, relatively abundant funds and a constantly improving investment environment, noted Long Guoqiang, a researcher at the Development Research Center of the State Council.

By People's Daily Online