Why China always attracts more foreign investment

Foreign companies are looking at new opportunities in the Chinese market as the country remains a top investment destination despite the many hurdles facing the global economy.

Foreign direct investment (FDI) in mainland China in use rose 37.9% year on year to 243.7 billion yuan in the first two months of this year, according to the latest data from the Ministry of Commerce. In dollar terms, enrollments rose 45.2% year-on-year to $37.86 billion.

(Photo/Xinhua)

This strong growth was underpinned by a record FDI level of 1.15 trillion yuan in 2021 as China’s strong economic fundamentals and ever-improving business environment continue to attract foreign capital.

A very large market with growing consumer demand, as well as the ongoing transition to more sustainable development, has opened up some of the most attractive opportunities for foreign investors.

Looking for a better life

From a small office in China, Amorepacific Corporation, a South Korean cosmetics conglomerate, has been one of the beneficiaries of China’s rapid growth over the past 30 years. With an industrial park in Shanghai, Amorepacific now offers a wide range of products and services, from skincare to color cosmetics, in more than 5,000 stores in 250 Chinese cities.

The growth of Amorepacific in China is mainly driven by rising Chinese living standards, said Mike Hwang, president of Amorepacific China. “Chinese consumers are demanding a better quality of life as the government’s goals, such as common prosperity, contribute to a more comprehensive and balanced development of the country’s market. This gave us a new direction for business development and gave us a new impetus for growth,” he explained.

Amorepacific’s success reflects China’s years of efforts to provide a better life for its people, which has created huge business opportunities for global investors. China’s middle income group has grown from over 100 million in 2010 to over 400 million in 2019, about 30% of the total population. Meanwhile, the just-completed Beijing 2022 Winter Olympic and Paralympic Games have created new consumer trends, with sports such as skiing rapidly gaining popularity and generating renewed interest among investors.

Decathlon, one of the world’s leading sporting goods retailers, is one of many companies that have joined in the win to seize new opportunities. “The sports industry is closely linked to economic development,” said Daisy Wang, vice president of Decathlon China, noting that Chinese consumers are increasingly adopting a healthy lifestyle and showing interest in outdoor niches such as skiing and camping. “We are playing an active role in this,” she said. Also recalling that by 2035 sports spending in China should be more than 4% of total GDP, Ms Wang affirmed that “Decathlon has full confidence in the future of the Chinese sports market.”

sustainable growth

China’s low-carbon path, which is an integral part of high-quality development, has given new impetus to green development around the world.

For Vale, an international mining company, the country’s efforts to transition to a low-carbon economy represent a huge opportunity. The Chinese market has been Vale’s largest market since 2006. In 2021, as one of the founding members, Vale joined the Global Low Carbon Metals Innovation Alliance established by China Baowu Steel Group, the world’s largest steel conglomerate.

“Vale has always placed China at the center of its business strategy,” said Tracey Xie, president of Vale China, adding that the company is confident that it can contribute to China’s green transformation through its product and technology portfolio.

China has committed to peaking carbon emissions by 2030 and achieving carbon neutrality by 2060, achieving the world’s largest reduction in carbon intensity in the shortest amount of time, history aside.

According to a report by the French bank Societe Generale, Chinese environmental investment is expected to reach 2.2 trillion yuan per year in the current decade, rising to 3.9 trillion yuan between 2031 and 2060.

“We see great potential in China’s green finance,” said Peter Qiu, chairman of Deutsche Bank (China) Co Ltd. The company will take full advantage of its role in sustainable development finance to help Chinese companies better take advantage of the opportunities presented by the transition to a green economy.

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